Week of February 3 - 7, 2020

Maureen Kelliher, CFA

Maureen Kelliher, CFA

February 11, 2020

Weekly Economic Review

Weekly Macro Updates

Unemployment Rate (Jan)  3.5% est., 3.6% actual, 3.5% prior
Change in Nonfarm Payrolls (Jan) 165k est., 225k actual, 147k prior: R+
Change in Private Payrolls (Jan)  155k est., 206k actual, 142k prior: R+
Change in Manufact. Payrolls (Jan) -2k est., -12k actual, -5k prior: R+
Initial Jobless Claims (Feb 1)  2.15k est., 202k actual, 217k prior: R+
Continuing Claims (Jan 25)  21720k est., 1751k actual, 1703k prior
Average Hourly Earnings YoY (Jan)  3.0% est., 3.1% actual, 3.0% prior
Labor Force Participation Rate (Jan) 63.2% est., 63.4% actual, 63.2% prior
Underemploy-ment Rate (Jan)  6.9% actual., 6.7% prior
Bloomberg Consumer Comfort (Feb 2)  66.5 actual, 67.3 prior
Markit US Services PMI (Jan F) 53.2 est., 53.4 actual, 53.2 prior
Markit US Composite PMI (Jan F ) 53.3 actual, 53.1 prior
Durable Goods Orders (Jan F)  2.4% est., 2.4% actual, 2.4% prior
Durables ex Transportation (Jan F)  -0.1% est., -0.1% actual, -0.1% prior

 Strong or Improving
 Inconclusive or lacking trend
 Weak or declining
R+ Revised up
R- Revised down

Directional change based on general
long-term tends.

Capital Market Implications

Last week’s employment reports showed continued job growth, now for a record 112 straight months.  New entrants have continued to join the workforce, as the labor force participation rate increased.  Wage growth was up slightly but still remains muted in the context of the overall strong employment environment. Manufacturing job growth continued to be negative, with automakers and miners making cuts.  Freight transportation was also weak.  Manufacturing orders were again muted, weighed down by trade issues, while services were better than expected.  The effect of the coronavirus is not yet reflected in US economic releases but this week’s reports may begin to give a picture of the virus’s potential impact on the US economy.

Equity markets saw strong returns last week, with the S&P 500 Index gaining 3.2%.  Growth continued to outperform value, with the Russell 1000 Growth Index returning 3.8% while the comparable value index was up 2.5%.  Small caps were also up, with the Russell 2000 Index gaining 2.7%.  International stocks regained some of their year-to-date losses, with both developed and emerging markets positive.  Bonds returns were largely flat, the US Aggregate Index down -0.1%.  Corporates markets were slightly positive, up 0.1%, while municipal markets lost -0.1%.  High yield bonds saw stronger performance, gaining 0.6%, in correlation with equity market gains.