Weekly economic update for January 10, 2022


Highlights of key economic statistics from last week compiled by Putnam Investments.


economy
  • The IHS Markit U.S. Composite PMI Output Index slipped to 57.0 in December from 57.2 in November.
  • Factory orders increased 1.6% in November, the Census Bureau noted.
  • The trade deficit widened sharply in November, the Census Bureau stated.


Employment
  • Initial jobless claims increased by 7,000 to 207,000 in the week ended January 1, 2022, the Department of Labor reported.
  • The United States added 199,000 jobs and the unemployment rate fell to 3.9% in December from 4.2% in November, according to the Bureau of Labor Statistics.


Profits
  • As of December 31, 2021, of the 15 S&P 500 Index companies reporting fourth-quarter earnings, 11 beat analysts’ estimates, according to S&P Dow Jones Indices.


Emotion
  • The European Commission’s Economic Sentiment Indicator for the euro area eased in December.


Europe
  • Eurostat noted euro area annual inflation is expected to rise to 5.0% in December from 4.9% in November.
  • The IHS Markit Eurozone Composite PMI Output Index dropped to 53.3 in December from 55.4 in November.
  • Eurostat reported euro area industrial producer prices rose 1.8% in November compared with October.


Rates
  • The yield on the 10-year Treasury note rose.
  • Federal Reserve policymakers noted, “... it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated,” in December meeting minutes.


Risks
  • Upward pressure on inflation from multiple fronts (supply chain disruptions, housing costs, and the labor market) could pressure central banks to pull forward their timelines for monetary policy normalization.
  • Declining liquidity and deteriorating financial conditions, combined with high valuations, should lead to a substantial uptick in risk asset volatility.
  • Global leverage, created by pandemic response packages, is at worrisome levels and will eventually need to be paid for.


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All economic and performance information is historical and does not guarantee future results. The views and opinions expressed are those of Putnam Investments, are subject to change with market conditions, and are not meant as investment advice.