Input Stories

In October, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index recorded a 1.4% annual gain, up slightly from 1.3% in September. The 10-City Composite saw an annual increase of 1.9%, down from 2.0% the previous month, while the 20-City Composite rose 1.3% year-over-year, down from 1.4%. Among the 20 cities, Chicago posted the highest annual gain at 5.8%, followed by New York at 5.0% and Cleveland at 4.1%. Tampa again recorded the lowest annual return, with prices falling 4.2%.

On a month-over-month basis, the U.S. National Index ticked down 0.2% before seasonal adjustment. At the same time, the 10-City and 20-City Composites both decreased in October, declining 0.2% and 0.3%, respectively.

High mortgage rates and inflation have begun to overwhelm home price resilience as affordability has slowed demand. Before seasonal adjustment, 16 of the 20 cities saw prices drop in October. The Midwest and Northeast markets continue to sustain growth as broader conditions across the country soften. Meanwhile, in addition to Tampa, the Sun Belt continued declining, including Phoenix (down 1.5%), Dallas (down 1.5%) and Miami (down 1.1%).

Following the weakest growth in more than two years in September, a new equilibrium has emerged within the housing market. Short-term momentum has stalled, and persistent affordability challenges have resulted in minimal price appreciation and declines in some regions.

In December, Texas factory activity contracted after rising the prior month. The production index plummeted 23.7 points to -3.2, dropping below the series average of 9.6. Furthermore, most other measures declined notably from November. The new orders index decreased 11.2 points to -6.4. Capacity utilization moved down 23.9 points to -4.5, while shipments plunged 25.7 points to -10.6.

Perceptions of manufacturing business conditions remained negative in December, with the general business conditions index inching down 0.5 points to -10.9. At the same time, the outlook worsened, with the company outlook index falling 5.6 points to -11.9. The uncertainty index weakened 15.7 points to 0, remaining far below the series average of 17.

Labor market indicators suggest a decline in both headcounts and the workweek in December, with the employment index stepping down 2.3 points to -1.1 and the hours worked index falling 17.4 points to -7.5. More than 13% of firms reported net layoffs, while a smaller percentage (12.3%) noted net hiring.

Price pressures were little changed, but wage pressures accelerated in December. The prices paid for raw materials index stepped up 0.7 points to 36. Meanwhile, the prices received for finished goods index decreased 2.6 points to 8.2. The wages and benefits index rose 6.4 points to 21.8, moving above the series average of 21.

The outlook for future manufacturing activity remained positive in December, with the future production index edging up 0.5 points to 34.2. Meanwhile, the future general business activity index ticked down 0.2 points to 10.8, while the future company outlook index inched up 0.3 points to 16.5.

The S&P Global Manufacturing PMI was 51.8 in December, down from the November reading of 52.2. New orders declined for the first time in a year. At the same time, exports fell for the seventh consecutive month, as tariffs continued to impact sales to key markets, especially Canada. Meanwhile, input and output prices rose in December, but at the slowest rate in 11 months. Despite the slowing pace of price increases, inflation remains elevated from a historical context in December.

Production rose over the month, allowing stocks of finished goods to rise for the fifth consecutive month. Nonetheless, output increased at a slower rate than November’s survey record due to the contraction in new orders. Furthermore, the gap between the growth of production and the drop in orders was the greatest since the height of the global financial crisis. If demand and export sales remain weak, the continuing rise in unsold stock likely will result in a decline in output in future months. Meanwhile, delivery times lengthened in December to their longest level in seven months due to difficulties receiving inputs as a result of supplier capacity constraints.

Uncertainty around tariffs continued to weigh on business confidence, with overall business confidence easing from November to the lowest level since April. Despite the uncertainty, expectations of lower interest rates and new investment plans kept business confidence positive. Firms expanded labor capacity in anticipation of strong sales next year. As a result, employment rose solidly for a fourth consecutive month in December.

In December, global manufacturing activity eased from 50.5 in November to 50.4. Output rose for the fifth consecutive month but at a slower pace than November, as new orders remained stable from the prior month. The stagnation in new work was due, in part, to the ongoing contraction in international trade, with new export orders declining for a ninth consecutive month. Staffing levels stayed the same, while backlogs of work decreased slightly. 

India, Vietnam, Greece and Pakistan had the highest PMI readings in December. On the other hand, Mexico, Germany, Japan, Brazil and Russia were some of the larger nations to register declines in activity. The increase in manufacturing output occurred across the consumer, intermediate and investment goods categories.

Meanwhile, both input and output price pressures picked up in December but remained below long-run averages. Forward-looking indicators were positive, with business optimism remaining at November’s five-month high and investment goods producers seeing positive gains after stalling recently.

Existing home sales increased 0.5% over the month in November but fell 1.0% over the year. Housing inventory moved down to 1.43 million units, reflecting a 5.9% drop from October but a 7.5% jump from last year. The median existing home price was $409,200, up 1.2% from last year. The Northeast and South posted monthly increases in existing home sales, while the Midwest registered a decline, and the West stayed the same in November. 

Single-family home sales rose 0.8% from October but fell 0.8% from November 2024, with the median price increasing 1.2% from last year to $414,300. Condo and co-op sales fell 2.6% over the month and over the year to 380,000 units in November. Meanwhile, the median price for condos and co-ops inched up 0.1% from the prior year to $358,600.

Homes were typically on the market for 36 days in November, up from 34 days in October and 32 days in November 2024. First-time buyers made up 30% of sales in November, down from 32% in October but unchanged from November 2024.

Manufacturing activity slowed in the Tenth District in December, with the month-over-month composite index declining 7 points to 1 from November. On the other hand, expectations for future activity rose 4 points to 13. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico. The month-over-month easing in activity was due to weakness in both durable and nondurable manufacturing. New orders stayed the same from November, but production fell. Meanwhile, shipments were flat after rising the prior month, and new orders for exports decreased at a faster pace than in November.

The production index turned negative, falling from 18 to -3, while the new orders index moved up from -2 to 0. The new orders for exports index remained negative and weakened from -3 to -4 over the month. The employment index declined from 11 to -4, contracting for the first time since July. The backlog of orders improved but remained negative, moving from -4 to -2. Both the pace of growth for prices received and paid grew month-over-month, with raw materials prices increasing from 36 to 40 and prices received climbing 9 points to 22. Furthermore, both prices received and paid rose at a faster pace year-over-year, increasing 8 points and 4 points, respectively.

In December, survey respondents were asked about employee turnover, productivity and capital expenditures. Approximately 24% of firms reported decreased employee turnover over the past year, while 15% cited an increase and 61% revealed no change. About one-third of firms reported increased productivity, 15% experienced a decrease and 51% saw no change. In 2026, 37% of respondents expect capital expenditures to be higher, 29% anticipate no change and 34% plan on lower capital expenditures.

Manufacturing activity in New York state decreased in December, with the headline general business conditions index falling 22.6 points to -3.9. The new orders index declined 15.9 points to 0.0, indicating new orders were flat from November, while the shipments index dropped 22.5 points to -5.7. Unfilled orders moved down from -5.8 to -14.9, while inventories slipped 2.7 points to 4.0, indicating business inventories continue to grow but at a slower pace. Delivery times shortened, and supply availability improved but remained negative, increasing 4.6 points to -6.9.

Employment increased in December, with the index for the number of employees inching up 0.7 points to 7.3. Meanwhile, the average employee workweek declined to 3.5 from 7.7, signaling a smaller increase in hours worked than in November. The prices paid index fell 11.4 points to 37.6, while the prices received index moved down 4.2 points to 19.8, a reflection of a slower pace of increase for prices received and prices paid.

In December, firms’ optimism regarding the future rose to a yearly high. The future business activity index gained 16.6 points, rising to 35.7. In the next six months, new orders are expected to increase and at a faster pace compared to the prior month at 38.0. The future employment index decreased 3.1 points to 8.8, suggesting an anticipated slower pace of employment growth over the next six months. Meanwhile, input prices are expected to rise at a slower pace, declining from 62.5 to 55.4, while selling price expectations are forecasted to increase at a faster pace, moving up from 41.3 points to 46.5. Furthermore, capital spending plans weakened from November, down from 11.5 to 6.9.

In December, Philadelphia’s regional manufacturing activity contracted for the third consecutive month and at a faster pace than November. The index for general business activity fell from -1.7 to -10.2. This month, 27.8% of firms reported decreases in activity, while just 17.6% of firms noted increases. The indexes for new orders and shipments returned to positive territory, rising from -8.6 to 5.0 and from -8.7 to 3.2, respectively. Meanwhile, the employment index moved up 6.9 points as the average employee workweek grew 11.0 points to 14.7.

The prices paid index declined from 56.1 to 43.6, its lowest reading since June, while the prices received index rose from 17.7 to 24.3. As has been the case for many months, the prices received index remained lower than the prices paid index, indicating that manufacturers have been absorbing a portion of higher costs paid.

Looking ahead, indicators showing expectations for future growth declined for the first time since June. After climbing 13.4 points in November, expectations for future business activity moved down 8.0 points to 41.6 in December. The drop came from an increase in the proportion of firms expecting a decrease in activity (12.6%). At the same time, the number of firms anticipating an increase in activity (54.2%) was virtually unchanged in December. The future new orders index decreased from 55.6 to 44.0, and the future shipments index edged down from 48.4 to 43.2. On the other hand, the capital expenditures index grew from 26.7 to 30.3, its highest reading since August. The future prices paid and prices received indexes declined from 75.1 to 62.6 and from 56.8 to 55.8, respectively. Additionally, the index for future employment stepped down from 35.7 to 27.1.

In December, firms were asked to estimate production growth in the fourth quarter compared to the third quarter. Of those responses, 52.0% expect higher production, while 16.0% anticipate a decrease. More than a majority of firms (61.5%) reported that uncertainty was at least a slight constraint on capacity utilization this quarter. Other issues cited included labor supply (50.0%) and supply chains (48.0%). Looking forward, 29.2% of firms expect energy markets to be a greater constraint on capacity utilization over the next three months.

In November, consumer prices increased 0.2% from September and 2.7% over the year, down from the 3.0% annual rise in September and lower than the 3.1% advance anticipated. Since the Bureau of Labor Statistics was unable to collect survey data in October, the agency used nonsurvey data sources for certain indexes, while other indexes were missing. Core CPI, which excludes more volatile energy and food prices, rose 0.2% from September and 2.6% over the year, lower than the 3.0% 12-month increase in September.

Energy costs advanced 4.2% over the year in November, after rising 2.8% year-over-year in September. Within the energy index, gasoline prices ticked up just 0.9% over the year, while fuel oil prices jumped 11.3%. Meanwhile, electricity prices increased 6.9% year-over-year, and natural gas prices surged 9.1%.

In November, food prices grew 2.6% over the year, after increasing 3.1% year-over-year in September, while prices for food at home advanced 1.9%. Meanwhile, prices for food away from home climbed 3.7% from November 2024, the same as the year-over-year increase in September. Of the different food groups, beef and veal and coffee continue to rise at the fastest pace, soaring 15.8% and 18.8% over the year, respectively.

The shelter index grew 0.2% from September and 3.0% over the year, continuing its downward 12-month trend since peaking at an 8.2% annual gain in March 2023. Meanwhile, prices for used cars and trucks increased 0.3% over the month and 3.6% over the year, while new vehicle prices ticked up just 0.6% from November 2024. Relatedly, prices for motor vehicle maintenance and repair jumped 6.9% year-over-year.

The headline inflation rate moderated some in November but is still elevated from earlier this year. Although Federal Reserve officials cut their interest rate target at their December meeting, markets anticipate that the Federal Open Market Committee will not lower its interest rate target at the January meeting. Amid significant divergences in the FOMC’s summary of economic projections regarding where rates are headed, officials are anticipated to assess the incoming data to determine the appropriate timing of additional cuts in 2026.

Nonfarm payroll employment increased by 64,000 in November, after declining by 105,000 in October during the federal government shutdown. In sum, employment is down by 41,000 from September. Meanwhile, August and September’s job gains were revised downward by 33,000 to a loss of 26,000 jobs and a gain of 108,000 jobs, respectively. The 12-month average stands at 78,000 job gains per month. The unemployment rate rose 0.2 percentage points from September to 4.6% in November, the highest rate in more than four years, while the labor force participation rate inched up 0.1 percentage point to 62.5%.

Manufacturing employment slipped by 5,000 in November, the seventh consecutive month of job losses, after decreasing by 9,000 in October. On the other hand, the collective job losses in August and September of 21,000 were revised upward by 5,000 jobs to a decrease of 16,000 jobs. Manufacturing employment is down 73,000 over the year, the most of any industry. Durable goods manufacturing employment fell by 4,000 in November, while nondurable goods employment edged down by 1,000. The most significant gain in manufacturing in November occurred in electrical equipment, appliance and component manufacturing, which added 2,200 jobs over the month. Meanwhile, the most significant loss occurred in motor vehicles and parts manufacturing, which shed 4,900 jobs over the month.

The employment-population ratio ticked down 0.1 percentage point from September to 59.6% in November and is down 0.2 percentage points from a year ago. Employed persons who are part-time workers for economic reasons jumped by 909,000 from September to 5.49 million in November and are up from 4.47 million in November 2024. Native-born employment is up 114,000 from September and 2,631,000 over the year. Meanwhile, foreign-born employment is up 58,000 over the month but down 21,000 over the year. On the other hand, the native-born unemployment rate is up 0.4 percentage points over the year to 4.3% in November, while the foreign-born unemployment rate is down 0.1 percentage point to 4.4%.

Average hourly earnings for all private nonfarm payroll employees rose 0.1%, or 5 cents, reaching $36.86. Over the past year, earnings have grown 3.5%. The average workweek for all employees inched up 0.1 hour to 34.3 hours and ticked up 0.1 hour to 40.0 hours for manufacturing employees.