Economic Update

Last Week in the News
November's unemployment rate held firm at 4.7% as employers added a better-than-expected 94,000 jobs to their payrolls, the Labor Department reported December 7. Hiring was brisk in education, health services, retail and professional services, helping offset job losses in construction, manufacturing and financial services. Average hourly earnings rose to $17.63 in November, a 0.5% increase from October, the largest monthly gain since June. Economists expected just a 0.3% rise.

Employees showed they were earning their pay because U.S. worker productivity shot up by a 6.3% annualized pace in the third quarter, the largest increase in productivity since the third quarter of 2003, the Labor Department said December 7. Meanwhile, unit labor costs -- a gauge of inflation and profit pressures scrutinized by the Federal Reserve -- was revised to show a 2% drop in the third quarter for the largest decline in four years.

In another surprise, orders to U.S. factories also unexpectedly rose by 0.5% in October, far better than the flat reading analysts had anticipated, the Commerce Department said December 5. The overall rise in factory orders was the best performance since a 3.4% increase in July.

The pace of growth in the U.S. service sector slowed, according to the Institute for Supply Management, whose index of non-manufacturing industries slipped from a reading of 55.8 in October to 54.1 in November, below analysts' expectations. Any reading above 50 indicates expansion. Rates on 30-year and 15-year fixed-rate continued to fall, reaching two-year lows, Freddie Mac reported December 6.

This week look for updates on the Producer Price Index on December 13 and the Consumer Price Index on December 14.

Economic data compiled from reports published by msnbc.com, cnn.money.com and Yahoo economic calendar.

Brian Makris

Private Mortgage Banker
IndyMac Bank
Retail Lending Group
273 South River Rd.
Bedford, NH 3110
Office: 603-232-9696

Fax: 603-386-6555
bmakris@nymc.com