Week of September 2 - 6, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

September 11, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Aug 31) 215k est., 217k actual, 216k prior
Continuing Claims (Aug 24) 1688k est., 1662k actual, 1701k prior
Wards Total Vehicle Sales (Aug) 16.80m est., 16.97m actual, 16.82m prior
ADP Employment Change (Aug) 148k est., 195k actual, 142k prior: R-
Factory Orders Ex Trans (Jul) 0.3% actual, -0.1% prior: R-
ISM Non-Manufacturing Index (Aug) 54.0 est., 56.4 actual, 53.7 prior
Change in Nonfarm Payrolls (Aug) 160k est., 130k actual, 159k prior: R-
Two-Month Payroll Net Revision (Aug) -20k actual
Change in Private Payrolls (Aug) 150k est., 96k actual, 131k prior: R-
Change in Manufacturing Payrolls (Aug) 5k est., 3k actual, 4K prior: R-
Unemployment Rate (Aug) 3.7% est., 3.7% actual, 3.7% prior
Average Hourly Earnings YoY (Aug) 3.0% est., 3.2% actual, 3.3% prior: R+
Average Weekly Hours All Employees (Aug) 34.4 est., 34.4 actual, 34.3 prior
Consumer Credit (Jul) $16.000b est., $23.294b actual, $14.596b 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

With the implementation of the latest round of tariffs, the focus last week was on the US employment report for August. Although the number of jobs created during the month, 130,000, was below estimates, some of the underlying data were encouraging. For example, wages grew 3.2% over the last year while the average workweek lengthened for the first time in some time and labor participation rate increased 0.2% for the month. With global growth still slowing and the trade war unresolved, it was encouraging to the see the US service sector demonstrate strength, as the ISM Non-Manufacturing Index rebounded in August to 56.4 from 53.7 in July.  

There was good news out of Asia last week when Hong Kong’s leaders agreed to withdraw the extradition bill that had ignited the protests and China announced further stimulus measures. As such, investors were encouraged and stocks rallied once again. For the week overall, the S&P 500 Index jumped 1.8% and the Dow Jones Industrial Average increased 1.5%. Gains were broad based for the second consecutive week with the majority of S&P sectors participating in the advance. The only true laggards were materials, health care and utilities, which were flat on the week. International markets were strong, as developed foreign markets and emerging markets both surged more than 2.0%. After rallying for months, bonds finally came under some selling pressure last week, as bond buyers reassessed the likelihood of a 50-bps rate cut at the next FOMC meeting. Thus, although high yield bonds rose last week, the remainder of the bond market including municipals, corporates and governments all lost ground, down on average -0.2%.