December 11, 2007—The labor market created 94,000 net new jobs in November while the unemployment rate remained at 4.7%. Nonfarm business productivity increased 6.3% in the 3^rd quarter, a welcome improvement on the 2.2% rise during the 2^nd quarter. The ISM Index inched down in November to 50.8 but remains in expansionary territory. Last, factory orders grew a larger-than-expected 0.5% in October.

Employment Situation
The labor market created 94,000 net new jobs in November, following an upwardly revised 170,000 job increase in October. The overall growth was driven by the service-producing industry, which added 127,000 jobs. The goods-producing industry, on the other hand, shed 33,000 jobs from the payroll. The weakness in the goods sector reflects the broad impact of the soft housing market. Average hourly earnings increased from $17.55 to $17.63, a 0.5% uptick, and last, the unemployment rate remained steady at 4.7%.

Productivity and Costs
Nonfarm business productivity increased 6.3 (SAAR) in the 3rd quarter, nearly tripling the 2.2% rise during the 2^nd quarter. On a year-ago basis, productivity has increased 2.7%. There was good news on the inflation front, as unit labor costs fell 2.0%, its largest decrease in four years. However, on a year-ago basis, unit labor costs are up 3.0%. The encouraging numbers in the 3^rd quarter are most likely temporary as slow economic growth in the 4^th quarter is projected.

ISM Index
For the fifth consecutive month, the ISM index inched down, decreasing 0.1 points in November to 50.8, its lowest reading since January. Manufacturing activity, however, is still in expansionary territory (above 50). New orders inched up 0.1 point to 56.5, while production increased 1.3 points to 51.9, but both are still below their numbers from earlier this year. "Prices paid" jumped 4.5 points to 67.5 and raises concerns about inflationary pressures going forward.

Factory Orders
Factory orders rose a larger-than-expected 0.5% in October after increasing 0.3% in September. The increase was caused by a 1.3% jump in orders for nondurable goods. Orders for core capital goods, which are a proxy for business investment spending, plunged 2.0%. Furthermore, shipments and inventories both increased 1.0% in October. Last, unfilled orders grew 0.1% for the month.