The government reported this morning that the economy added a net 261,000 jobs in October. That was not quite as big a post-hurricane bounce as economists had expected (economists surveyed by Bloomberg were looking for 300,000 jobs) but it was above the average of 162,000 a month over the last three months. The number crunchers also raised the September total to 18,000 jobs from a previous loss
The economic data this morning paint contradictory pictures on the strength of the U.S. economy. On the one hand GDP in the third quarter grew at a better than expected 3% annual rate. On the other hand, Â real final sales to domestic purchasers, which strips out the effect of trade and inventories, the two most volatile components of the GDP figures, grew at only a 1.8% rate. That’s the slowest rate since early 2016.
Initial claims for unemployment fell by 12,000 to 260,000 for the week ended September 30. Economists survyed by Briefing.com had projected initial claims of 265,000 for the week. The initial claims total remained below the 300,000 level that economists use as a rule-of-thumb indicator for a healthy economy for the 135th straight week.
It’s hard to interpret today’s report on manufacturing from the Institute for Supply Management because of the damage inflicted on the U.S. economy by hurricanes Harvey, Irma, and Maria, but it certainly looks like the economy is strengthening,. The ISM factory index climbed to 60.8 in September –economists surveyed by Bloomberg had expected a reading of 58.1. This it the highest level for the index since May 2004
The Treasury market has been taking a beating recently with traders and investors increasingly pricing in a December interest rate increase from the Federal Reserve. So today’s flat performance for the 10-year Treasury is actually a relief, especially considering that the Treasury sold $28 billion in 7-year notes today.
The U.S. economy added 209,000 jobs in July. Economists surveyed by Briefing.com were looking for 181,000 net new jobs in the month. Government statisticians revised the June jobs report up to 231.000 new jobs from 222,000. The official unemployment rate fell to 4.3% from 4.4% in June.
The first reading on second quarter U.S. GDP growth from the Bureau of Economic Analysis puts growth at 2.6% year over year. That’s below the consensus of 2.8% growth among economists surveyed by Briefing.com. But an important advance from the growth rate in the first quarter, which was revised downward to 1.2% from 1.4%.
On July 3 the Atlanta Federal Reserve’s GDP forecast for second quarter GDP growth climbed to 3% year over year. That’s up from a forecast on June 30 Â for 2.7% growth. If the forecast proves accurate that would be good news for incomes, the economy, and a stock market that has lately been searching for an upward trend. The problem for the forecast, however, is easily summed up in one word: autos.
The Institute for Supply Management’s manufacturing index for June released this morning climbed to 57.8 from 54.9 in May. That was the highest level of the index, where anything above 50 signals expansion, since 2014. Economists surveyed by Briefing.com had projected a slight uptick to 55 for June.Â
My overall conclusion: This morning the market is looking at solid numbers on the growth side and weak inflation growth. If there is any conclusion to be drawn from one month’s numbers, it’s that the Federal Reserve, looking at this data, won’t see any reason to rush ahead with another interest rate increase.
