- The Change in Manufacturing Payrolls for August was -11K versus estimates of 0K and a downwardly revised -23K in July.
- Average Hourly Earnings for August rose .1% versus estimates of a .3% gain and an upwardly revised .5% increase in July.
- The Final Univ. of Mich. Consumer Confidence reading for August rose to 82.0 versus estimates of 79.0 and a prior forecast of 78.7.
- Construction Spending for July fell 1.2% versus estimates of a .1% decline and a .4% increase in June.
- ISM Manufacturing for August fell to 54.5 versus estimates of 54.5 and a reading of 54.7 in July.
- ISM Prices Paid for August fell to 73.0 versus estimates of 76.0 and a reading of 78.5 in July.
- Pending Home Sales for July fell 7.0% versus estimates of a 1.5% decline and unchanged in June.
BOTTOM LINE: Job growth in the US picked up in August and the unemployment rate approached a five-year low, the latest in a string of reports to show the economy will avoid a sharp downturn, Bloomberg said. Employment in service-producing industries rose 118,000, boosted by a 60,000 job increase in education and heath service jobs. Builders add 17,000 jobs, the most since February, led by commercial construction. Average hourly earnings rose 3.9% year-over-year, the best in five years. Most economists believe the economy needs to create about 100,000 jobs a month to keep unemployment from rising. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.
Confidence among US consumers was higher than forecast in August as gas prices fell in the final two weeks of the month and incomes grew, Bloomberg said. The current conditions index, which is a gauge of Americans’ perceptions of their financial situation and whether they should buy big-ticket items rose to 103.8 versus a prior estimate of 100.8. Consumers’ inflation concerns eased in August as gas prices fell. I continue to believe consumer sentiment will make new cycle highs over the intermediate-term as stocks rise, energy prices fall, interest rates remain relatively low, inflation decelerates, housing stabilizes, the job market remains healthy and irrational pessimism lifts further.
US construction spending fell in July by the most since 2001 as the housing market weakened after five years of record sales, Bloomberg said. Private-non-residential construction surged 22% from last year as companies spent more on offices, healthy-care facilities and transportation projects. I expect construction to remain well-below recent levels, but commercial building to somewhat cushion the deceleration.
Growth in US manufacturing eased slightly last month, Bloomberg reported. The prices paid component of the index fell to 73.0 from 78.5 the prior month. The closing price of a barrel of oil fell below $70 for the first time in two months on Aug. 29 as production disruption speculation subsided. The new orders component of the index fell to 54.2 versus 56.1 in July. The employment component of the index rose to 54.0 versus a reading of 50.7 the prior month. I continue expect manufacturing to remain around average levels as companies gain confidence in the sustainability of the expansion, thus rebuilding near-record low inventories.
Contracts to buy previously owned homes in the US fell in July, Bloomberg reported. The decline should ensure the Fed remains on hold. Pending home sales fell 9% in the Midwest, 7.7% in the Northeast, 6.4% in the South and 5.5% in the West. The average 30-year mortgage rate has declined 32 basis points since July 21. As well, the homebuilding stocks(HGX Index) have begun ignoring negative data points, rising 8.7% since July 21. I continue to believe housing is in the process of slowing to more healthy sustainable levels. Home inventories should begin heading lower from current levels over the next few months.
No comments:
Post a Comment