Economic Notes

Employment

The US employment report for Nov. shows continuing
moderate jobs growth, a 4% yr/yr hourly wage increase
and a slightly faster weekly wage take. With inflation
now low, the real wage has again moved up modestly. The
labor market remains tight reflecting the ongoing slow
growth of the labor force (0.8% yr/yr). The improvement
in the real wage since this summer reflects a move up in
the nominal wage from a 3.5%AR to 4.0% and a break from
the sharp fall off in fuels prices.

A firm employment picture is helping to cushion the effects
on the economy of slowdowns in construction and manufacturing
output. An improving real wage is a decent leading indicator
of consumption growth. No guarantees obviously, since
confidence needs to hold up so that consumers do not seek to
bank all of the wage improvement.

Leading Indicators

The leading indicator sets I follow are consistent with the
notion that the economy should continue growing, but the
data is mixed with regard to the pace of growth. The broad
services sector seems to be gaining some momentum, while
construction and manufacturing show no turnaround yet,
reflecting inventory excess. On balance, it looks like more
slow-go ahead.

To see a view of the outlook for global economic growth
based on a weighted compilation of purchasing manager
reports, click here.