- October Unemployment Drops
- Republicans gain control of Congress
- Manufacturing improves in October
- Auto sales boosted by Lower Fuel Costs
- Mortgage Applications Drop in October
U.S. Unemployment Rate Declines in October:
The U.S. economy added 214,000 jobs last month, helping push the unemployment rate to 5.8%, a six-year low. The number did fall short of the average economist estimate of 235,000. However, both August and September’s estimates were revised up by 31,000. With the upward revisions, the U.S. economy has now added more than 200,000 jobs each of the last nine months, which shows that companies are optimistic that the U.S. economy will withstand a slowdown in global demand. Unlike in some past months, the increase in employment was pretty much across the board; factories, construction companies and retailers were all among those adding employees. The share of the population with jobs rose to 59.2% in October, the highest since July 2009, from 59% the prior month. However, the report still showed no signs of upward pressure on wages yet as average hourly earnings increased only 0.1% last month.
Republicans Gain Control of Congress:
Republicans gained control of both the Senate and the House of Representatives for the first time since 2006, transforming the political dynamic in Washington and changing the legislative agenda for President Obama’s final two years in office. The GOP picked up 7 Senate seats and tightened their grip on the House, capturing their largest majority in that chamber since World War II. Republican candidates also scored wins in a number of high-profile gubernatorial races in Florida, Illinois, Wisconsin, Massachusetts, and Maryland. President Obama has invited Congressional leaders to the White House on Friday to take stock of the new political landscape.
Manufacturing Accelerates in October:
U.S. manufacturing activity unexpectedly accelerated in October, showing strong domestic demand is enabling U.S. factories to withstand weakness abroad. The Institute for Supply Management’s (ISM) Factory Index jumped to 59 in October, the highest level since March 2011, up from 56.6 in September. As a reminder, Index readings above 50 signal an expansion in manufacturing activity. Of 18 manufacturing industries, 16 reported growth in October, led by producers of plastics, textiles and metals, as more companies reported improvements in orders than the prior month. Strong sales of motor vehicles and gains in business capital spending have boosted demand at U.S. factories even as more manufacturers reported that export orders weakened last month.
Lower Fuel Costs help Boost Car Sales:
U.S. automakers reported stronger-than-expected sales in October as lower fuel costs renewed buyers’ interest in larger vehicles such as trucks and SUVs. Auto sales rose 6.1% to 1.28 million units in October. October’s pace of sales translates to an annualized pace of 16.46 million, which puts the industry is on track for its best annual performance since before the financial crisis. GM, Chrysler, Nissan, and Honda all reported higher sales, helped along by low interest rates and stable economic conditions. Chrysler posted a 22% increase from a year ago as sales climbed to the highest level since 2001. Ford’s U.S. sales declined 2% to 188,654 as it pulled back on incentive spending for its trucks. October is traditionally a slower month for the U.S. auto industry, with buyers taking a break after the summer selling season. However, this year has proved an exception leading many auto makers to predict a strong finish for the year as gasoline prices dip below $3-per-gallon across much of the country.
Mortgage applications drop in October:
U.S. mortgage applications declined for a second week as fewer homeowners refinanced their properties. The Mortgage Bankers Association said today that applications for new mortgage loans fell 2.6% in the week ending October 31st after a 6.6% decline in the prior week. Refinancing applications dropped 5.5%, while applications to finance new purchases rose 2.6%, rebounding from the lowest level since February. The average rate for a conventional 30 year loan rose to 4.17% over the past week, while the average rate for a 15 year loan jumped to 3.38%.
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