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US unemployment claims will fall to their lowest levels since 1969 as the US economy grows 2.1%.jobs

Demand for goods is still growing rapidly, and manufacturers are struggling to keep up. Indeed, the total order balance exaggerates how much demand increased in November. This is because it is not seasonally adjusted and most of the time it decreases in October and then bounces back in November.

Nevertheless, the total seasonally adjusted order balance rose 11 points in November, the highest level since the record began in 1977. Unfortunately, the relationship between total order balances and official measurements of manufacturing production is very weak. I was asked to compare an order to a “normal level”, but currently the manufacturer cannot process all orders.

Still, manufacturing output could probably rise further in the fourth quarter as previously temporarily laid-off staff were recalled and manufacturers invested to increase productivity. Production will be supported by the massive work backlog accumulated this year, perhaps because replenishment demand will decline, even if orders decline next year.

On the other hand, strong demand allows almost all producers to raise their selling prices. In fact, the expected output price balance has risen from +59 in October to +67 (the highest level since May 1977). This is consistent with core producers’ output price inflation rising from 6.5% in October to nearly 8.0% in January. Therefore, core product CPI inflation is expected to rise further over the next six months, helping to push spring headline rates above 5%.

US unemployment claims will fall to their lowest levels since 1969 as the US economy grows 2.1%.jobs

Source link US unemployment claims will fall to their lowest levels since 1969 as the US economy grows 2.1%.jobs

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