LIVE MARKETS-Data delivery: November jobs, October retail sales, December PMI, September inventories

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DATA DELIVERY: NOVEMBER JOBS, OCTOBER RETAIL SALES, DECEMBER PMI, SEPTEMBER INVENTORIES

Investors were buried under a truckload of data on Tuesday, covering jobs, consumer spending, business activity and inventories.

And as the government shutdown effect continues to echo, the data spans across four months, from fresh to ancient.

The U.S. economy added 64,000 jobs last month USNFAR=ECI, making up a portion of the 105,000 lost in October as more than 150,000 federal employees accepted buyouts as part of the Trump administration's cost-slashing efforts.

The headline number landed 28% higher than analyst expectations, but fell far short of the 100,000 job adds needed to keep abreast of the growing population.

It was the fourth payrolls number over the last year that surprised to the upside.

"Over the past seven months, nonfarm payrolls have increased by less than 20,000 per month on average," writes Jim Baird, chief investment officer at Plante Moran Financial Advisors. "By virtually any reasonable expectation, that’s consistent with a disappointing hiring environment and soft labor conditions."

The report - oddly timed, as the Labor Department scrambles to make up for time lost during the longest-ever government shutdown - also provided partial data for the month of October.

A peek under the hood shows service providers accounted for 78.1% of private sector job adds, but stripping away healthcare and social assistance, private payrolls were nearly unchanged. Government and manufacturing sectors shed 5,000 jobs each.

"The lack of hiring breadth is a very concerning sign for those looking for work across most sectors and a red flag that the economy is not broadly hitting on all cylinders," Baird adds.

Between September and November, the unemployment rate USUNR=ECI unexpectedly swelled to 4.6%, its highest level since September 2021.

That's not exactly music to the Fed's ear, and it's likely attributable to the mass firing of federal employees and an increase in the Labor Market Participation rate, which ticked up to 62.5% since September.

"The big picture is that the labor market is still cooling with the unemployment rate rising to 4.6%, but that also increases the odds of another cut from the Fed in January," says Sonu Varghese, global macro strategist with Carson Group.

Wage growth, providing a first glimpse of November inflation, cooled on monthly and annual bases to 0.1% and 3.5%, respectively.

Tomorrow, the intrepid Labor Department is due to release a second look at last month's price growth when it unveils its CPI report.

"This deceleration in wage growth may turn out to be a big story for the job market in the coming months," says Jeffrey Roach, chief economist at LPL Financial.

Economists predict year-on-year core CPI to print at an even 3%, which would put real earnings growth at 0.5%. When earnings growth is hotter than consumer price inflation, that means the consumer has more spending money.

Which provides a nice segue to the Commerce Department's October retail sales report USRSL=ECI, which showed receipts at U.S. retailers USRSL=ECI were unchanged in October instead of growing by the paltry 0.1% analysts expected, and coming on the heels of September's equally paltry - and downwardly revised - 0.1% gain.

Digging below the headline, a 4.9% jump in spending in the woebegone department store segment and a healthy 1.8% increase in non-store retail (which includes online shopping), were undercut by a 1.6% drop in motor vehicles/parts and a 0.8% dip at the gasoline pump. Outlays at food/drink establishments, often viewed as a barometer of consumer sentiment, slipped 0.4%.

"It’s possible some of the strength in October reflected consumers shifting forward holiday spending, with non-store sales surging," writes Michael Pearce, chief U.S. economist at Oxford Economics. "The one surprising disappointment was a contraction in spending at bars and restaurants."

But the "control" figure, which excludes autos, gasoline, building supplies and food services - and is most closely correlated with the personal expenditures element of GDP - jumped by a more robust 0.8%, breezing past the 0.4% increase economists predicted.

In more contemporary news, U.S. business expansion has lost a bit of momentum this month.

S&P Global's advance "Flash" December purchasing managers' indexes (PMI) showed the manufacturing side USMPMP=ECI shed 0.4 point to 51.8, just a tad south of the 52.0 consensus.

The larger services sector USMPSP=ECI also lost some oomph, dropping by a steeper-than-expected 1.2 points to land at 52.9.

In aggregate, the composite measure USPMCF=ECI dipped 1.2 pts to an even 53, a six-month low.

That's still comfortably north of 50, the PMI dividing line between contraction and expansion, but a miss is a miss.

"Firms have ... lost some confidence in the outlook and have restricted their hiring in December in accordance with the more challenging business environment," writes Chris Williamson, S&P Global's chief business economist. "Higher prices are again being widely blamed on tariffs, with an initial impact on manufacturing now increasingly spilling over to services to broaden the affordability problem."

Finally, the value of goods stacked in the storerooms of U.S. businesses USBINV=ECI grew by 0.2% way back in those days of yore we call September, a wee bit stronger than expected.

(Stephen Culp)

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