Investing Your Money

MANUFACTURING & PRODUCTION

• Economic activity in the manufacturing experienced a significant contraction in October.  The Institute for Supply Management’s monthly survey of supply executives resulted in a PMI of 38.9%, the lowest level since September 1982.  There was broad deterioration across the index components, with contraction in new orders, production, employment, order backlogs, and exports.  The prices paid index slid from 53.5% in September to 37.0% for October, representing its lowest reading since December 2001.
• Industrial production rose 1.3% in October following a downwardly revised drop of 3.7% in September.  Mine output increased 6.1% as activity recovered after Hurricanes Gustav and Ike.  Factory output advanced 0.6% for the month, and utilities output rose 0.4%.
• Capacity utilization improved slightly from 75.5% in September to 76.4% for October, though the rate remains below the historical average of 81.0%.

LABOR MARKETS

• Job losses were widespread in October, with nonfarm payrolls dropping by 240,000.  The manufacturing sector lost another 90,000 jobs, while construction payrolls fell by 49,000 in October.  Within the service economy, retail trade employment declined 38,100; financial services payrolls decreased by 24,000; and the leisure and hospitality industry cut 16,000 jobs.  Employment in temporary help services declined by 33,600 in October, pointing to continued weakness in labor markets.
• The unemployment rate rose from 6.1% in September to 6.5% for October.

SALES

• Retail sales declined for the fourth consecutive month, falling 2.8% in October.  Motor vehicle sector sales dropped 5.5% for the month, leaving sales ex-auto down 2.2%.  In October, sales at furniture and home furnishings stores decreased 2.5%, electronics and appliance store sales slipped 2.3%, and home improvement store sales fell 0.4%.  Sporting goods, hobby, book & music store sales declined 1.6% for the month, and apparel store sales decreased 1.4%.  The largest decline occurred in gas station sales, which plunged 12.7% in October.

PRICES

• The U.S. Import Price Index posted its third straight decline, falling 4.7% in October.  Prices of petroleum imports decreased 16.7% for the month, while non-petroleum import prices fell 0.9%.  Export prices declined 1.9% in October.
• Wholesale prices for the third consecutive month, as the Producer Price Index for Finished Goods decreased 2.8% in October.  Energy prices tumbled down 12.8% and food prices slipped 0.2%; excluding energy and food, core PPI rose 0.4%.  Over the past twelve months, PPI advanced 5.2%.
• The Consumer Price Index dropped 1.0% for the month.  Consumer energy prices plummeted 8.6%, but food prices advanced 0.3% in October; core CPI declined 0.1%.  Year over year, the CPI increased 3.7% and core CPI rose 2.2%.

FEDERAL RESERVE

• At the meeting concluding on October 29, 2008, the Federal Open Market Committee decided to lower the target federal funds rate by 50 basis points to 1.00%.