EUROZONE INDUSTRIAL PRODUCTION CRATERS
IP declined 1.4% M/M in October after a 2.3% drop in September. German IP declined 2.4% in October, the third consecutive reduction for a 17.9% annualized decline in the last 3 months (-26.5% a.r. in the last 2 months). The Netherlands also saw their IP crater with a 4.7% M/M decline in October. Greece and Spain saw their IP rise in October! (Eurostat)
UK employment hits record levels Number of people in work rises 40,000 to 29.6m
Unemployment was 2.51m – down 82,000 on the previous quarter but virtually unchanged on the three months to September.
The jobless rate was 7.8 per cent of the workforce, unchanged since last month’s data.
Private sector job creation continued to outstrip public sector losses. Employment in the public sector fell by 24,000 to 5.75m in the quarter to September, the lowest level since 2002.
The private sector was up 65,000 at 23.9m, the highest since records began in 1999. Local government, down 32,000, and the civil service and armed forces, down 3,000 each, were at record lows.
Saudis cut oil output to lowest in a year Surging US production and weaker growth sap demand
US oil production rose by 760,000 barrels a day this year – the largest increase in annual output since crude oil started to be pumped commercially in the US in 1859 – according to fresh US government estimates released on Tuesday.
Adam Sieminski, head of the US Energy Information Administration, said increased drilling in the tight shale formations of North Dakota, Montana and Texas “will boost US crude oil production above 7m barrels per day next year for the first time since 1992”.
Meanwhile, figures published on the eve of the Vienna meeting of Opec showed that Saudi Arabia pumped 9.5m barrels a day in November, the lowest level in a year and down from the 30-year high of 10.1m b/d set in June.
The fall in Saudi production reduced overall Opec output to 30.78m b/d in November, the lowest in almost a year.
Saudis management of oil prices to fit their budget requirements is a big drag on Europe. Thanks to shale oil, the U.S. has benefitted from lower oil prices in 2012.
CONTAGION REACHES THE U.S.
The 3.6% decline in exports outpaced a 2.1% drop in imports, widening the nation’s trade imbalance, the Commerce Department said. The trade gap with China hit a record while the deficit with Japan surged.
The decline in exports to the lowest level since February underscored how a key engine for U.S. growth is sputtering. (…)
Exports fell in every major category, including aircraft, industrial supplies and food, pushing monthly exports down to $180.5 billion. It was the largest month-over-month drop since January 2009.
The table below from Haver Analytics reveals that U.S. exports have declined 0.5% during the last 3 months and that non-petroleum imports have retreated 4.1% since July.
Even discount stores are now feeling the pinch: Dollar General’s Gloomy Outlook Sinks Discount Group
(…) But the 4% same-store sales growth was lighter than some analysts expected, while the gross profit margin unexpectedly dipped.
Most important, Dollar General’s full-year earnings guidance implied Q4 EPS will be 89 cents. Wall Street had seen 94 cents.
CEO Rick Dreiling blamed tough year-earlier comparisons and “near-term pressures that are impacting our customers’ confidence and spending.”
He also cited a “challenging competitive environment,” which is spurring the retailer to step up advertising.
The National Federation of Independent Business indicated that its November Index of Small Business Optimism collapsed to 87.5 from 93.1 in October. The figure was its lowest since March 2010. A net negative 35% of firms expected the economy to improve, a record low. The percent expecting higher real sales in six months also fell to its lowest (-5%) in nearly a year. The percent of firms with one or more job openings improved m/m to a relatively low 17%. A modest 5% percent of firms planed to increase employment and a relatively low 22% planned on increasing capital expenditures. (Chart below from IBD)
The percentage of firms planning to raise worker compensation dropped out of bed to 4%, down from its February high of 12%. The percentage of firms reporting that credit was harder to get jumped to 9%, its highest level in six months but still down versus the early-2009 high of 16%. No firms were lifting average selling prices while the 16% who were planning to raise prices was down from the recovery high of 24%.
Here’s a long term NFIB chart from Bespoke that shows how weak it is.
The White House told Republicans it would include an overhaul of the corporate-tax code as part of any deal to reduce the deficit, putting a major priority for business groups on the table.
The offer from the White House came amid a fresh round of proposals from both sides, as President Barack Obama and House Speaker John Boehner exchanged counteroffers to address the so-called fiscal cliff. Big gaps remain between Democratic and Republican negotiators, and while talks are continuing, there is no guarantee a deal will be struck, with or without a corporate-tax revamp. (…)
Republicans said they didn’t consider the move a concession at all, given their assumption that the corporate tax code would be tackled at some point. “It’s a red herring,” said Boehner spokesman Michael Steel. (…)
As part of its budget proposal, the White House also slightly lowered its target for new tax revenue to $1.4 trillion, down from Mr. Obama’s initial offer of $1.6 trillion, officials said. It retained items from an earlier offer that had irked Republicans, included new stimulus spending and an increase in the U.S.’s borrowing limit. (…)
Democrats and Republicans involved in the cliff talks are trying to design a two-phase timetable. If a deal is reached, it would lock in some changes to taxes and spending rules by the end of 2012 and then require a number of more significant changes next year to entitlement programs and the tax code.
Members of the Business Roundtable seek fiscal cliff compromise
Japanese core machinery orders rose for the first time in three months, but brought little cheer as they fell short of expectations.
Core orders for machinery–a closely watched indicator of how aggressively businesses will invest in the near future–rose 2.6% on month in October after two straight months of declines, the Cabinet Office said Wednesday.
Putin Promises to Bolster Economy Russian President Vladimir Putin called for strengthening the country’s domestic production capacity to bolster economic growth, criticizing companies and public officials who send money abroad.
Michigan Approves Union Curbs Michigan’s governor signed a pair of right-to-work bills, dealing labor unions one of their biggest setbacks in years in this historically union-friendly state.