This Week’s Economic Update, November 8, 2021

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You likely noticed that last week’s update did not include my normal introduction.  That was because I was struggling with becoming a breakthrough Covid case.  I started feeling symptoms on October 27.  By the time I wrote the update my edges were pretty much rubbed off.  I felt I had the worst head cold ever with two strange exceptions.  My glands did not swell up like they do with a cold nor did I have a sore throat at all.  I was fully vaccinated with the Pfizer vaccine.  Once I tested positive, I was approved for the monoclonal antibody treatment which I received on Wednesday November 3.  Between that and taking virtually every suggested over the counter medication I was able to improve and avoided any hospital stay.  Glad to be on the mend.

Outside of the ISM Manufacturing report for October, this past week provided some strong reports that the fourth quarter continues to be off to a strong start, supporting the news in my last update. 

The late week jobs reports for October showed an overall increase of 604,000 new jobs in the private sector.  This was huge, well above the September number of 365,000.  This included growth of 60,000 jobs filled in the manufacturing sector.  In the manufacturing sector the strongest growth was in the automotive sector.  This indicates that the supply chain is improving, allowing workers back to the plants to complete the vehicles waiting for parts.  The highest job gains were found in leisure and hospitality at 164,000 and professional services at 100,000.  Note that the net figure of added jobs, that number you likely saw in the media, was 531,000 in new jobs.  The lower number reflects the loss of government jobs.  Education lost 65,000 jobs in October which is very strange considering the season we are talking about.  This is the result of many families evidently moving their children to private schools, home schooling or once again holding them back for a year until the pandemic issues abate.

The ISM non-manufacturing report was extremely strong once again.  Non-manufacturing grew from 61.9 in September to 66.7 in October.  In fact, the report did not just improve, it hit an all time high.  The increase is in spite of supply chain headwinds and staffing shortages.  Comments in the report point to an explosion of demand that took off in October.  Concerns in the report center around the ability of suppliers to produce and provide the merchandise needed to meet the market needs as well as staffing to serve the clients.  The other concern is that of growing prices which was well noted in the report.

So what happened to the ISM Manufacturing report?  Based on all the supporting information from the past couple of weeks, it was expected to increase, instead it declined slightly from 61.1 to 60.8.  This means that the growth in manufacturing just slightly abated.  Embedded in the report are some signs.  Long raw material lead times are continuing to extend, slowing production in some areas.  Worker absenteeism due to the Delta Variant caused short term shut downs in areas.  Supply chain issues continue to inhibit meeting the demand of new orders.  The ISM report was likely overly impacted by the supply chain issues which caused the plateau of growth that was seen.

Last month, Ford released the new Maverick pick up which is smaller than the Ranger.  This model is based on the Ford Escape.  The pick-up truck market is fueled by 85% male buyers.  In the first month Ford sold 4,100 of the Mavericks.  What is very interesting is that this new model is really catching on with both female and younger buyers.  The Maverick caught the attention of 18- to 35-year-old buyers making up nearly 30% of buyers, double that of larger trucks.  Women made up 25% of the buyers, compared with 15% normally.  It could be the looks; it could be the size or it could be the price tag that is beneath $20,000.  Could the Maverick be the 1964 ½ Mustang of 2022?  We will have to see.

Have a great week, stay well

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