Week of September 24 - 28, 2018

Maureen Kelliher, CFA

Maureen Kelliher, CFA

October 3, 2018

Weekly Economic Review

Weekly Macro Updates


GDP Annualized QoQ (2Q T) 4.2% est., 4.2% actual, 4.2% prior

Initial Jobless Claims (Sep 22) 210k est., 214k actual, 202k prior: R+

Continuing Claims (Sep 15) 1678k est., 1661k actual, 1645k prior: R+

Conf. Board Consumer Confidence (Sep) 132.1 est., 138.4 actual, 134.7 prior: R+

Personal Income (Aug) 0.4% est., 0.3% actual, 0.3% prior

Pending Home Sales NSA YoY (Aug) -1.0% est., -2.5% actual, -0.7% prior: R-

New Home Sales (Aug) 630k est., 629k actual, 608k prior: R-

PCE Core YoY (Aug) 2.0% est., 2.0% actual, 2.0% prior

Wholesale Inventories MoM (Aug P) 0.3% est., 0.8% actual, 0.6% prior:R+

Durable Goods Orders (Aug P) 2.0% est., 4.5% actual, -1.7% prior

Chicago Purchasing Manager (Sep) 62.0 est., 60.4 actual, 63.6 prior

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

As we enter the last quarter of the year, U.S. economic growth continues, with second quarter GDP at 4.2% and the FOMC raising rates for a third time in 2018.  The consumer continues to be an important part of the economic picture, with confidence measures at record levels.  Employment remains strong, with unemployment claims at lows last seen in 1969, suggesting prolonged job growth.  Personal income was up slightly as wage growth has seen some breakout; Amazon’s plan to raise its minimum wage highlights the tight labor market.  Manufacturing activity has also remained strong with a surge in durable goods orders and sustained purchasing manager index levels.  Trade continues to be in the news, with the revised NAFTA deal and lack of progress with Chinese negotiations dominating headlines. 

During the last week of the quarter, most stock market indices (both domestic and international) were negative, in part due to trade news, with only the Russell 1000 Growth Index and the Nasdaq Index ending the week with a gain.  Telecom stocks were the best performer for the week, gaining 1.1%.  Materials and Financials stocks were the largest underperformers, both down over -4.0%.   Year-to-date, Consumer Discretionary and Technology stocks were the strongest performers, both up over 20.0%.  Only two sectors, Materials and Consumer Staples, are negative.  Bonds were positive for the week, with the Barclays U.S. Aggregate Bond Index up 0.2%.
 
The sector allocation in the stock market will change as of October 1st as S&P and MSCI have changed their sector classification system.  The Telecom sector was renamed “Communication Services” and certain stocks (such as Facebook and Google) will move from the Technology and Consumer Discretionary sectors to Communication Services.