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The U.S. added 148,000 jobs in December. While below the estimate of 190,000 jobs, most economists agree it is a respectable level as we move closer to full employment. The total number of jobs added in 2017 was 2.06 million, the least amount since 2011. The unemployment rate remained unchanged at 4.1 percent for the third month. Both construction and manufacturing posted solid gains, while the retail sector lost 20,000 jobs. Retail employment is increasingly difficult to track with the growth of online shopping. The Bureau of Labor Statistics does not include internet warehouses, such as Amazon, as part of the retail industry. Wages increased 0.3 percent in December and 2.5 percent for the year.

Other Key Indicators this Week:

Manufacturing – The Institute for Supply Management's manufacturing index increased in December at the fastest pace in three months to 59.7. The average for the year was 57.6, the strongest level of activity in 13 years. New orders, prices paid and production levels all increased. Employment was the weakest measure in the index, falling slightly as firms continue to struggle finding enough skilled labor.

Auto Sales – The glass is half full and half empty when you dissect the auto sales data for December. On one hand, annual auto sales topped 17 million for the third year in a row, the first time in history. On the other hand, sales declined for the first time in nine years. Auto makers sold 17.8 million vehicles in 2017, down 1.6 percent from 2016. Truck and sport utility vehicles accounted for 65 percent of total sales, spurred by low gas prices and interest rates. The average price for a new vehicle is 10 percent higher than in 2010.

FOMC Minutes – The key debates at the December FOMC meeting centered on how aggressive the Federal Reserve will be in 2018 with rate increases. If the tax cuts stimulate the economy faster than expected or inflation increases significantly, the Federal Reserve stands ready to raise short-term rates three or four times. If the economy stalls or inflation proves weaker, the Fed will back off its aggressive tightening. The one consensus from the meeting was the need to maintain a gradual approach.

Strategically for Credit Unions:

The first week of the year is starting off on a flat note – the yield curve is at 50 basis points. This is three basis points flatter than the closing spread of 2017 and 41 basis points less than the average for last year. The Dow crossed yet another threshold to 25,000. The long end of the Treasury curve needs to see strong inflation data over the next few months before yields will move higher.

Note: Due to the Martin Luther King, Jr, holiday weekend, there will be no Behind the Numbers next week. Behind the Numbers will resume on January 19. The monthly Market Overview and Data Review and Credit Union Rate Survey will be published on Monday, January 8.

Sarina Freedland –Senior Investment Officer

Although this information has been obtained from sources we believe to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. All herein listed securities are subject to availability and change in price. Past performance is not indicative of future results. Changes in any assumption may have a material effect on projected results.