Weekly Unemployment Claims Decline as Manufacturing Activity Softens

Manufacturing Business Outlook Regional manufacturing activity softened in November, as per the latest Manufacturing Business Outlook Survey. The current general activity index slipped into negative territory, falling from 10.3 to -5.5, indicating a contraction. However, the new orders (8.9) and shipments (4.5) indexes remained positive, suggesting some resilience.

Employment trends improved, with the employment index rising to 8.6 after flat results last month. Meanwhile, the average workweek index surged to its highest level since April 2022 at 17.4. Input and output prices increased at slower rates, with firms reporting a median price hike of 3.0% over the past year.

Firms’ Expectations Despite current softness, manufacturers hold an optimistic six-month outlook. The future general activity index jumped to 56.6, its highest level since June 2021. Expectations for new orders, shipments, and employment also surged. However, firms forecast a 3.0% inflation rate for U.S. consumers and expect wages to rise 3.4% in the coming year.

Market Forecast

• Labor Market: A robust labor market continues to underpin broader economic stability, with declining initial claims signaling ongoing resilience.
• Manufacturing Sector: While current conditions softened, strong future sentiment suggests the potential for a recovery, supported by anticipated increases in orders and employment.
• Outlook: Expect a neutral to slightly bullish market impact, with labor stability balancing manufacturing challenges.