Week in Review: November 6, 2020

Economic data was little more than a footnote in a week dominated by coverage of the Presidential election. In any other week, October’s employment report would have received plenty of coverage, especially given the 1.0% decline in the unemployment rate to 6.9%. Nonfarm payrolls added 638K jobs, ahead of the expected 600K, led by a much better-than-expected 906K increase in private payrolls. Partially offsetting the strong private sector gains, was a loss of 268K government jobs, including 147K temporary census workers. Notably, 159K state and local education jobs were also lost during the month.

The manufacturing recovery continued to accelerate in October with the ISM manufacturing index reaching its highest level since November 2018.  Strength was broad based across nearly every underlying sub-component. New orders were particularly strong, surging to their highest level since January 2004.

The services sector pulled back modestly in October, but remained solidly in expansion territory. Business activity, new orders, and employment all decelerated in the month, with the latter nearly returning to contraction territory. Renewed restrictions in response to surging coronavirus cases could have a meaningful impact on the services sector moving forward.

After hitting a 14-year high in August, the U.S. trade deficit shrank nearly 5% in September, to $63.9B, thanks to a 2.6% rise in exports and just a 0.5% increase in imports.