Week of October 1 - 5, 2018

Maureen Kelliher, CFA

Maureen Kelliher, CFA

October 12, 2018

Weekly Economic Review

Weekly Macro Updates

Unemployment Rate (Sep) 3.8% est., 3.7% actual, 3.9% prior

Change in Nonfarm Payrolls (Sep) 185k est., 134k actual, 270k prior: R+

Initial Jobless Claims (Sep 29) 215k est., 207k actual, 215k prior: R+

Continuing Claims (Sep 22) 1665k est., 1650k actual, 1663k prior: R+

Underemployment Rate (Sep) 7.5% actual, 7.4% prior

Average Hourly Earnings YoY (Sep) 2.8% est., 2.8% actual, 2.9%

Labor Force Participation Rate (Sep) 62.7% est., 62.7% actual, 62.7%

ISM Employment (Sep) 58.8 actual, 58.5 prior

Bloomberg Consumer Comfort (Sep 30) 61.6 actual, 61.2 prior

Durable Goods Orders (Aug F) 4.5% est., 4.4% actual, 4.5% prior

Factory Orders (Aug) 2.1% est., 2.3% actual, -0.5% prior: R-

Markit US Manufacturing PMI (Sep F) 55.6 est., 55.6 actual, 55.6 prior

ISM Manufacturing (Sep) 60.0 est., 59.8 actual, 61.3 prior


 Strong or Improving

 Inconclusive or lacking trend

 Weak or declining

R+ Revised up

R- Revised down

The labor picture was a focus of last week as September’s unemployment rate fell to a level not seen since December 1969.  September’s jobs report showed the 96th consecutive increase, marking eight years of growth.  Demographics groups (such as teens) that have struggled to participate in the past are making gains and companies are becoming more lenient on who they are willing to hire as they struggle to find workers.  Wage growth remains surprisingly tepid given the robust jobs growth picture although some industries where labor is tight, such as construction, have seen greater increases.  Slower wage growth is also helping to keep inflation from rapidly increasing.  Manufacturing releases continue to reflect growth although trade continues as a risk-on factor in the markets, particularly as tensions with China have continued.
Stocks began the quarter in flat to negative territory, with the S&P 500 Index down -1.0% and the Russell 2000 index down -3.9%; the Dow was flat for the week.  Value continued its recent outperformance over growth, with the Russell 1000 Value index gaining 0.1% while the Russell 1000 Growth index was down -2.4%.  Geopolitical and trade concerns continued to weigh on international markets, as developed markets lost -2.3% and emerging markets were down -4.5%.  Bond returns reflected last week’s precipitous rise in rates, with the Barclays U.S. Aggregate Bond Index down -0.9%.  Corporate bonds returned -1.1% for the week.  Municipal and high yield markets also saw negative returns, down -0.5% and -0.4% respectively.