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Economic news was mixed with housing indicators generally positive. Stocks swung during the week on reaction to comments by elected officials on the on progress on the fiscal cliff. Barely, the optimistic trades outweighed the negative with stocks modestly positive for the week.
 Major equity indexes were up for the week. Traders primarily focused on whether there appeared to be progress on the pending U.S. fiscal cliff. Stocks were mixed but mostly down Monday on apparent lack of progress on the fiscal cliff with concern about the next tranche for Greece’s bailout. On Tuesday, stocks fell despite healthy reports on home prices and consumer confidence (durable report was neutral) and despite an agreement in Europe on bailout funds for Greece. Again, traders worried that the U.S. fiscal cliff might not be addressed in a timely and sufficient manner.
 However, at mid-week stocks posted notable gains even though new home sales disappointed and the Beige Book showed a sluggish economy. Again, the focus was on the fiscal cliff and it was all about the latest comments by key elected officials on the matter. This time, it was comments by Speaker of the House John Boehner and President Barack Obama. The president indicated that he was “confident" that something would be done by the end of the year” while the speaker stated he believed that talks could “avert this crisis sooner rather than later.”
Equities rose significantly on Thursday, but this time traders paid attention to better-than-expected and positive reports on GDP, initial jobless claims, and pending home sales. Traders also grew a little more optimistic about a short-term deal on the fiscal cliff. Stocks were little changed Friday as traders postured over fiscal cliff worries and end of the month positioning.
Equities were up this past week. The Dow was up 0.1 percent; the S&P 500, up 0.5 percent; the Nasdaq, up 1.5 percent; the Russell 2000, up 1.8 percent; and the Wilshire 5000, up 0.8 percent.
Equities were mixed but mostly up modestly for the month of November. The Dow was down 0.5 percent; the S&P 500, up 0.3 percent; the Nasdaq, up 1.1 percent; the Russell 2000, up 0.4 percent; and the Wilshire 5000, up 0.5 percent.
For the year-to-date, major indexes are up as follows: the Dow, up 6.6 percent; the S&P 500, up 12.6 percent; the Nasdaq, up 15.5 percent; the Russell 2000, up 10.9 percent; and the Wilshire 5000, up 12.6 percent.
Weekly percent change column reflects percent changes for all components except interest rates. Interest rate changes are reflected in simple differences.
 Treasury yields were down moderately for the week. Daily swings were quite modest. Rates nudged down Monday on concerns that euro-area finance ministers would not be able to agree on a plan to clear an aid payment to Greece, leading to modest flight to safety. Pro-independence election wins in the Catalan region of Spain also added to flight. Yields eased slightly Tuesday despite positive economic news on housing as worries rose that the Greek bailout would stall. On mid-week, rates slipped again in part due to disappointing new home sales. Also, bond traders took a view more pessimistic on progress on the fiscal cliff than equities traders. Rates were essentially unchanged Thursday despite strong economic data. Yields were down fractionally on Friday as a weak personal income report (which included an easing in headline PCE inflation) offset a modestly positive Chicago PMI. Fiscal cliff worries also weighed on rates.
For this past week Treasury rates were down as follows: the 2-year note, down 3 basis points; the 5-year note, down 7 basis points; the 7-year note, down 7 basis points; the 10-year note, down 7 basis points; and the 30-year bond, down 2 basis points. The 3-month T-bill was unchanged.
 The price of crude ended the week essentially unchanged with minimum daily volatility. The spot price of West Texas Intermediate eased half a buck a barrel on Monday on worries about completing another round of the bailout for Greece. Crude dipped by about the same amount Tuesday on a forecast that U.S. crude supplies were expected to rise. Wednesday, prices rose somewhat more than half a dollar per barrel on fears that the fiscal cliff would not be resolved timely. But on Thursday, crude rose a little more than a dollar on a notable upward revision to third quarter GDP growth. WTI rose another dollar a barrel on Friday on a better-than-expected Chicago PMI.
Net for the week, the spot price for West Texas Intermediate edged up 61 cents per barrel to settle at $88.87.
Covering key sectors for the consumer, housing, and manufacturing, data were mixed this past with housing being the highlight.
 Real GDP growth for the third quarter was revised up significantly but the composition deteriorated. The Commerce Department puts the second estimate at 2.7 percent annualized, compared to the advance estimate of 2.0 and second quarter rate of 1.3 percent.
But the composition shifted toward inventory investment and away from demand components. Final sales of domestic product rose 1.9 percent versus the advance figure of 2.1 percent and second quarter growth of 1.7 percent. Final sales to domestic producers (which exclude net exports) were revised to 1.7 percent from the advance estimate of 2.3 percent and compared the prior quarter's 1.4 percent.
By components, revisions were largely due to higher estimates for inventories, nonresidential structures, and exports. Notable downward revisions were seen in consumer spending and business equipment. Estimates for residential investment and government purchases were little revised.
Headline inflation for the GDP price index remains strong in the third quarter, revised down marginally to 2.7 percent from the initial 2.8 percent reading and following 1.6 percent in the second quarter. But when excluding food and energy, inflation pressure is softer as the revised second quarter figure came in at 1.3 percent, compared to the initial estimate of 1.5 percent and the second quarter's 1.4 percent.
Overall, the headline GDP number looks good but the detail raises questions about the sustainability of the recovery. Looking ahead, the fourth quarter may be softer due to Hurricane Sandy disrupting business activity.
 Hurricane Sandy has wreaked havoc on a number of economic indicators and now you can add the personal income report to that list. Personal income in October was flat for the month, following a 0.4 percent boost in September. Notably, the important wages & salaries component fell 0.2 percent after gaining 0.3 percent in September. The Commerce Department indicated that Hurricane Sandy weighed down on private wages and salaries.
 Hurricane Sandy also dumped on spending. Consumer spending for the latest month declined 0.2 percent, compared to a 0.8 percent surge in September.
By components for spending, durables fell 1.9 percent, following a 2.0 boost the prior month. Nondurables dipped 0.2 percent, following a 1.4 percent surge in September. Services edged up 0.1 percent in October after a 0.3 percent boost the prior month. Inflation had only minimal impact on spending, given the modest rise in headline inflation.
 Turning to inflation, the headline PCE price index eased to 0.1 percent from a sizeable 0.3 percent jump in September. The core rate held steady at 0.1 percent. The food component rose 0.3 percent, following a 0.1 percent dip in September. Energy dipped 0.2 percent in October after a 4.8 percent boost the prior month.
Year-on-year, headline prices were up 1.7 percent in October compared to 1.6 percent in September. The core was up 1.6, matching the pace in September. On average (year-ago basis), inflation remains below the Fed’s long-term inflation goal of 2 percent.
It is hard to determine what the income and spending numbers mean by themselves. It will take another month of post-Sandy data to see the current trends. However, other reports on the consumer are looking moderately favorable—including consumer confidence.
 Consumer confidence in November was steady and firm with buying plans for homes a special positive. The consumer confidence index rose to a new recovery high of 73.7 in November from an upwardly revised 73.1 in October. Strength was centered in the expectations component which is up 1.1 points to 85.1. The present situation component is down one tenth to 56.6.
Holding down the present situation were flat readings on the current jobs market with 38.8 percent of consumers still saying jobs are hard to get which was unchanged from October.
Job readings on the expectations side showed improvement with more seeing more jobs opening up in the next six months. But income expectations eased back with fewer seeing their income rising in the next six months. This is not a good indication for the holiday shopping season. What is a good sign for the season, however, is a nearly four percentage point jump in those who plan to buy a major appliance in the next six months which is at 50.6 percent.
Another plus in the report is a 1.5 percentage point jump to 6.9 percent in those who expect to buy a house in the next six months. This is the latest indication of building momentum for the housing sector. Inflation expectations are another plus in the report, down two tenths for the 12-month outlook to 5.6 percent in what is a reflection of falling gas prices.
 There was one notable question mark on the housing front this past week. But by the end of the week, three of four housing indicators were moderately positive, pointing toward continued improvement in this sector. The first two of the positive indicators were from key measures of house prices.
Improvement in home prices is a key plus for the economic outlook with Case-Shiller pointing to steady momentum underway. Case-Shiller's adjusted monthly reading for its 20-city index rose 0.4 percent in September following similarly solid gains of 0.5 percent and 0.3 percent in the two prior months. Improvement was really evident in the year-on-year rate which is up to plus 3.0 percent from plus 2.2 and plus 1.1 percent in the prior two months. Gains sweep across nearly all 20 cities.
Monthly improvement was seen in 13 of the composite 20 with five down and two flat.
 On the home price front this past week, the U.S. economy went two for two this week with a gain in FHFA adding to Case-Shiller. FHFA home prices advanced 0.2 percent in September, following a 0.5 percent gain in August.
Year-on-year, the index is up 4.3 percent, compared to 4.5 percent in August.
Regionally, prices were mixed as only three of the nine Census regions posted rising in August, three flat, and three down. For the nine Census divisions, seasonally adjusted monthly price changes for September ranged from minus 1.0 percent in the New England division to plus 0.8 percent in the Middle Atlantic division.
Overall, the two reports on home prices indicate that the housing sector continues its slow mend. Also, they indicate that the Fed’s Operation Twist and quantitative easing efforts are paying off in terms of helping to raise asset prices.
 At midweek, the modest uptrend in housing was called into question by disappointing new home sales.
New home sales had been a bright spot on the economic calendar but early in this past week, new home sales came in at a 368,000 annual rate which is a very steep 19,000 below the Econoday consensus. Also, September was revised 20,000 lower to 369,000.
The Commerce Department noted that Hurricane Sandy had only a minimal effect on October, hitting at month end and in only one area of the country. Sales in the Northeast, which in any case is by far the least active region in the report, fell 32 percent in the month.
Another unfavorable sign in the report was a second straight month of price weakness, down 4.2 percent for the median to $237,700 but these numbers are not based on repeat transactions and are affected by shifts in sales between price ranges. It is difficult to believe that new home prices for comparable houses can be down so sharply while other price measures are headed up.
Supply remains low in the new home market at 4.8 months at the current sales rate. This—combined with home builder optimism—suggests that new home sales will resume its modest uptrend over the next few months. The November housing market index was up a very sharp five points to 46 for the highest reading in 6-1/2 years. By components, November's HMI gain was strongly centered in current sales.
 The outlook for the housing sector looked uncertain following the flat readings of yesterday's new home sales report. Thursday's report on pending home sales, which tracks contract signings for existing homes, should renew expectations for a positive contribution from the housing sector. The index jumped a very strong 5.2 percent with the impact of Hurricane Sandy, based on only a fractional decline in the Northeast, proving to be very limited, at least in the October report. The Midwest showed a very strong gain as did the South.
October’s pending home sales index was at a five-year high.
Although the monthly numbers in housing have been a little volatile, the overall picture for housing from the latest reports is one of continued improvement, helping to support the recovery—including through increased consumer spending on numerous items related to furnishing new housing and upgrading existing housing.
 The manufacturing sector has been struggling and is not the lead sector of the recovery anymore. The latest durables headline number is soft but there was modest strength in the details. New factory orders for durables in October were unchanged after rebounding 9.2 percent up September and after a massive 13.1 percent fall in August. Market expectations were for a 0.8 percent decline.
The transportation component tugged down on October data. Excluding transportation, orders rose 1.5 percent after gaining 1.7 percent in September. Analysts forecast a 0.4 percent dip in orders excluding transportation.
The transportation component fell 3.1 percent after a 29.7 percent surge in September. All three major subcomponents declined—motor vehicles, down 1.6 percent; nondefense aircraft, down 5.8 percent; and defense aircraft, down 4.3 percent.
Outside of transportation, modest strength was in all major industries except for “other” which was flat.
 On another positive note, investment orders returned to the positive column as nondefense capital goods orders rebounded 1.7 percent in October, following a 0.4 percent dip the prior month. However, current quarter activity is still soft with shipments for this series slipping 0.4 percent, following a 0.3 percent decline in September.
Overall, the numbers were not stellar. But they do suggest that manufacturing is not declining but is either temporarily flat or marginally rising.
 Regional Fed surveys for November were mixed in terms of improvement versus slowing. But either way, activity is sluggish.
Texas factory activity was little changed in November but the outlook slipped. The production index, a key measure of state manufacturing conditions, came in at 1.7, indicating output barely increased from October. Other survey measures suggested flat manufacturing activity in November. The new orders index came in at 0.4, suggesting that demand was unchanged from October.
Perceptions of broader business conditions worsened in November. The general business activity index fell to minus 2.8 from plus 1.8 in October, returning to negative territory.
 Indexes reflecting future business conditions fell sharply in November. The index of future general business activity plunged from 16.8 to minus 5.3, its lowest reading in four months. The index of future company outlook dropped from 20.9 to 1.8. Indexes for future manufacturing activity also fell this month but remained positive.
Manufacturing activity picked up sharply in the Richmond Fed's district in November with the index rising to plus 9 from October's minus 7. Still, the latest number reflects only modest growth for the month. New orders showed notable improvement did shipments. The new orders index jumped to plus 11 from minus 6 in October.
Employment was also up while prices paid, reflecting lower energy prices, were down. Hurricane Sandy, which had a major effect on the Philly Fed's November report, apparently had little impact on the Richmond Fed's region.
 Manufacturing activity in the Kansas City Fed District again slipped as the composite index declined to minus 6 in November from minus 4 in October. This marked the first time the composite index has been negative for two straight months since mid-2009. The consensus called for mild improvement in the manufacturing index in November to minus 1 from minus 4 the prior month.
Manufacturing slowed at durable goods-producing plants, while nondurable factories reported a slight uptick in activity, particularly for food and plastics products. Other month-over-month indexes were mixed in November. The production index was unchanged at minus 6, while the new orders and order backlog indexes declined for the third straight month to their lowest levels in three years. In contrast, the employment index increased from minus 6 to 0, and the shipments and new orders for exports indexes were less negative. The raw materials inventory index decreased further from 2 to minus 7, while the finished goods inventory index rose from 3 to 9.
Overall, recent key numbers from regional Fed surveys have oscillated near breakeven—maybe a little higher. Manufacturing is in a soft patch but not declining.
In the Beige Book of anecdotal evidence which was prepared in advance of the December 11th and 12th FOMC meeting and released this past week, the economy in recent weeks was characterized as growing “at a measured pace” versus the prior Beige Book language that the economy “generally expanded modestly.” Relative strength varied by District with seven Districts posting modest growth, two were stronger, and three were either slow or weaker. Weaker conditions in New York were attributed to widespread disruptions at the end of October and into November caused by Hurricane Sandy. Philadelphia reported general weakness that was exacerbated by the hurricane.
Sectors were mixed. According to the Beige Book, consumer spending grew at a moderate pace in most Districts. In contrast, manufacturing weakened, on balance. Seven of the twelve Districts reported either slowing or outright contraction in manufacturing, and two others gave mixed reports. Consumer spending grew at a moderate pace in most districts while manufacturing weakened. The Beige Book noted that contacts in a number of districts expressed concern and uncertainty about the federal budget—especially the fiscal cliff. The Fed said seven of 12 districts reported “either slowing or outright contraction in manufacturing” as some contacts expressed concern about the outlook for 2013 because of the uncertainty surrounding the outcome of the fiscal cliff negotiations. Employment rose in most districts but progress was generally described as modest.
Overall, the recovery continues to progress but at a soft pace with relative sector strengths shifting. There is little in this report to divert the Fed from its currently loose monetary policy. A safe bet is that policy will be unchanged at the December 11-12 meeting. However, there have been hints that the Fed may implement new guidance formats based on goals for near-term inflation and employment.
The economy is soft but moving forward. Housing is improving while manufacturing is near flat. After discounting Hurricane Sandy effects, the consumer sector likely is still on a modest uptrend—especially after taking into account higher confidence and lower jobless claims.
The spotlight is on the consumer as indicators start to report on holiday season activity. The highlight is Friday’s jobs report for November. But earlier, we see if motor vehicle sales rebounded from Hurricane Sandy while ADP hints at private payrolls. Updates also are posted for sentiment and consumer credit. With the manufacturing sector wavering, traders likely will give extra attention at week’s open to the Markit PMI and to the ISM manufacturing survey.
The Markit PMI manufacturing flash index rose a solid 1.4 points in November from the final October reading to a plus 50 level of 52.4 that indicates accelerating growth in monthly activity. The new orders index, up 1.7 points to 52.8, was at a five-month high and points to further growth in activity in the months ahead. New export orders, which had been in long contraction, showed virtually no change as do total backlogs. Other readings include faster expansion for output, faster expansion for employment, rising prices for both inputs and outputs, and faster contraction in inventories -- all consistent with rising activity.
Markit PMI manufacturing index (final) Consensus Forecast for November 12: 52.1
Range: 51.0 to 52.5
The composite index from the ISM manufacturing survey showed mild improvement in October but remained soft. The ISM manufacturing index rose two-tenths on the month to 51.7. Importantly, forward momentum may be picking up as the new orders index rose to 54.2 from 52.3 in September. Production also improved, moving into positive territory at 52.4 from 49.5 in September.
ISM manufacturing composite index Consensus Forecast for November 12: 51.7
Range: 49.9 to 52.5
Construction spending rebounded 0.6 percent in September, following a decline of 0.1 percent the prior month. The boost in September was led by a 2.8 percent increase in private residential outlays after a 1.2 percent fall the month before. For the latest month, private nonresidential spending slipped 0.1 percent while public outlays decreased 0.8 percent. The construction sector continues to improve but largely in housing with the single-family component perhaps joining the multifamily component with notable strength.
Construction spending Consensus Forecast for October 12: +0.4 percent
Range: -0.5 to +1.3 percent
Sales of total light motor vehicles were weighed down by Hurricane Sandy. As it approached the U.S. East Coast, consumers in the East decided to spend more time prepping for the impact than shopping for a new car. And recovery mode slowed sales for which the monthly period goes all the way out to October 31. October’s annual sales rate came in at 14.29 million which was a sharp 4.4 percent lower than September's. Weakness in the month was evenly split between cars and trucks and domestic-made and foreign-made.
Motor vehicle domestic sales Consensus Forecast for November 12: 11.8 million-unit rate
Range: 11.5 to 12.0 million-unit rate
Motor vehicle total sales Consensus Forecast for November 12: 15.0 million-unit rate
Range: 13.9 to 15.3 million-unit rate
ADP private payroll employment added 158,000 jobs in October, based on the first report since ADP changed its methodology. From BLS’ employment situation report, private payroll employment rose 184,000 for the same month.
ADP private payrolls Consensus Forecast for November 12: 125,000
Range: 40,000 to 155,000
Nonfarm business productivity in the third quarter advanced an annualized 1.9 percent, matching the pace in the second quarter. Unit labor costs growth dipped an annualized 0.1 percent annualized, following a 1.7 percent increase in the second quarter. The increase in third quarter productivity reflected a 3.2 percent gain in nonfarm business output after a 2.1 percent advance in the second quarter. Hours increased 1.3 percent in the third quarter, following 0.2 percent the prior quarter. Unit labor costs decelerated on a slower growth in hourly compensation-1.8 percent versus 3.6 percent in the second quarter.
Nonfarm Business Productivity Consensus Forecast for revised Q3 12: +2.8 percent annual rate
Range: +2.4 to +3.0 percent annual rate
Unit Labor Costs Consensus Forecast for revised Q3 12: -0.9 percent annual rate
Range: -1.9 to -0.4 percent annual rate
Factory orders over the last two months have been really distorted by extraordinarily sharp swings in aircraft orders. Total orders rose 4.8 percent in September after falling a revised 5.1 percent in August. A slightly more positive indication comes from the important category of nondefense capital goods excluding aircraft which showed a 0.2 percent gain for new orders following a 0.3 percent gain in August. More recently, new factory orders for October were unchanged.
Factory orders Consensus Forecast for October 12: -0.1 percent
Range: -1.2 to +0.5 percent
The composite index from the ISM non-manufacturing survey in October posted at 54.2, safely above 50 to indicate monthly growth though at a slightly slower rate of monthly growth than September's 55.1. Growth in new orders slowed a bit but the 54.8 reading was healthy and points to activity down the production chain in the months ahead. Business activity, akin to a production index in this report, also slowed but at 55.4 was still solid and compared to 59.9 in September.
ISM non-manufacturing composite index Consensus Forecast for November 12: 53.6
Range: 50.0 to 55.0
Initial jobless claims fell 23,000 in the November 24 week to 393,000. However, according to comments from the Labor Department, there is no indication that states are carrying extra claims from Hurricane Sandy. If this level does not include extra claims related to the storm, then a comparison against the month-ago total may be a fair one for judging the recent direction of unemployment claims. Readings in late October, before the storm hit, showed claims at 363,000 with the four-week average at 367,250. The current four-week average is worse and over 400,000 at 405,250.
Jobless Claims Consensus Forecast for 12/1/12: 380,000
Range: 360,000 to 395,000
Nonfarm payroll employment in October increased 171,000, following a gain of 148,000 in September and a boost of 192,000 in August. Private payrolls increased 184,000 in October after gaining 128,000 the month before. Payroll gains were widespread in the private sector. Average hourly earnings were flat in October, following a 0.3 percent jump the month before. The average workweek was unchanged at 34.4 hours in October. Turning to the household survey, the unemployment rate edged up one tenth in October to 7.9 percent after dropping to 7.8 percent the prior month from 8.1 percent in August.
Nonfarm payrolls Consensus Forecast for November 12: 80,000
Range: 25,000 to 159,000
Private payrolls Consensus Forecast for November 12: 95,000
Range: 50,000 to 160,000
Unemployment rate Consensus Forecast for November 12: 8.0 percent
Range: 7.9 to 8.1 percent
Average workweek Consensus Forecast for November 12: 34.4 hours
Range: 34.3 to 34.5 hours
Average hourly earnings Consensus Forecast for November 12: +0.2 percent
Range: 0.0 to +0.3 percent
The Reuter's/University of Michigan's consumer sentiment index turned pessimistic in latter November as the final November reading came in at 82.7 versus an initial reading of 84.9. A comparison of the bi-monthly periods suggests an 80.0 level or so since the initial report. Consumer sentiment first broke over 80 in October. Comparing the monthly periods showed little change with November ending one tenth higher than October. Weakness was concentrated in expectations, at 77.6 versus an initial 80.8. The current conditions index fell to 90.7 compared to 91.3.
Consumer sentiment Consensus Forecast for preliminary December 12: 83.0
Range: 80.0 to 85.5
Consumer credit outstanding in September gained $11.4 billion, following August's very large revised gain of $18.4 billion. The non-revolving component, inclusive of the student loan category and auto sales, rose $14.3 billion in the month on top of August's $14.1 billion gain. Revolving credit, where credit card debt is tracked, actually fell, down $2.9 billion for the third decrease in four months.
Consumer credit Consensus Forecast for October 12: +$10.0 billion
Range: +$7.0 billion to +$16.5 billion
R. Mark Rogers is the author of The Complete Idiot’s Guide to Economic Indicators, Penguin Books, 2009.
Econoday Senior Writer Mark Pender contributed to this article.
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