Freitag



Today in History:  

On Sept. 7, 1940, Nazi Germany began its eight-month blitz of Britain during World War II with the first air attack on London.

Image result for uk nazi blitz


Today in Economic News: 

Screen Shot 2018-09-02 at 10.36.09 PM


US Employees on Nonfarm Payrolls Total MoM Net Change SA

US PayRoll Growth vs. Earnings Growth 

  • Headline = +201K with Payroll growth decelerating just -1bp to +1.59% Y/Y
  • Revision = -50K revision to prior two months … basically the opposite dynamic of last month where a soft headline was accompanied by a solid positive revision to the prior month(s).
  • AHE = accelerating to +2.9% Y/Y, marking the fastest pace of growth of the cycle.
  • Unemployment Rate = flat at 3.9% with poor internals as employment drops and LFPR declines
  • Underemployment Rate = Ticks down -10bps to 7.8%
  • U6-U3 Spread =  tightens -10bps to new cycle tight at 350bps
  • Labor Force Participation Rate = drops -20bps to 62.7%
  • Implied Income Growth = The combination of flat aggregate hours growth and accelerating wage growth point to modest sequential acceleration in aggregate income growth in August. The near-term outlook for domestic Consumption, by extension, remains healthy.
  • Implied Industrial Production = Aggregate hours in the manufacturing space suggest flat sequential growth for August Industrial Production

(Source: Hedgeye) 

U.S. Review 

Economy Appears Solid Despite Trade Tensions 

  • Despite ongoing concerns surrounding trade policy, business activity reportedly picked up in August. The ISM manufacturing and non-manufacturing indices both advanced, increasing to 61.3 and 58.5, respectively.
  • Employers added 201,000 new jobs in August. The unemployment rate was unchanged at 3.9%. Average hourly earnings are now up 2.9% YoY, a new cycle high.
  • The trade deficit rose to $50.1 billion in July as exports dropped 1.0%. In contrast to the substantial contribution in Q2, (expectation are for trade to weigh on GDP growth in coming quarters).

(Source: Wells Fargo Economics Group)

(Source: Bloomberg) 

Global Review

Emerging Market Concerns Ease 

  • Fears around emerging market contagion eased this week, allowing the focus to shift back to global central bank developments and economic data releases.
  • The Bank of Canada held policy steady this week but signaled aa possible acceleration in the pace of rate hikes, although Canada’s jobs report was disappointing.
  • On the policy front, Brexit negotiations showed tentative signs of making progress, although a preliminary deal remains elusive for now. Meanwhile, markets remain on edge around global trade tensions, with concerns Japan may be the next target for U.S. tariffs.

(Source: Bloomberg) 


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U.S. Review cont..

  • Manufacturing activity appeared unscathed by trade tensions in August. The ISM manufacturing index hit 61.3, the highest reading in 14 years. Both the current production and new orders indices posted large increases during the month. The prices paid component eased somewhat, but remained elevated at a still-high 72.1. Tariffs were mentioned by several respondents who noted 45 suppliers were able to pass on tariff-related price increases. Meanwhile, capacity constraints tightened as supplier delivery times and order backlogs increased.

(Source: Wells Fargo Economics Group) 

 

(Source: Bloomberg) 

  • Outside of the factory sector, firms also reported a positive assessment. The ISM non-manufacturing index topped expectations and jumped 2.8 points to a 58.5 reading in August. The current activity, new orders and backlog sub-indices each 25 edged higher during the month, indicating that the pick-up in activity was broad-based. The prices paid index eased, but remained high at 62.8.

(Source: Wells Fargo Economics Group) 

  • Meanwhile, the surge in exports in the second quarter as some businesses rushed to get merchandise out the door ahead of retaliatory tariffs will likely be reversed in the third quarter. Total exports fell 1.0% in July , bringing the trade deficit to $50.1 billion.  The dip in exports follows a 0.7% drop in June. The consumer  goods, capital goods and food & beverage categories also saw significant gains in May only to be followed by back-to-back declines in June and July. Meanwhile, strong consumer spending and business investment continued to support demand for imports, which increased 0.9% in July. Gains were broad-based with imports increasing in five out of six major categories. Net exports are poised to be a drag on overall GDP growth in the third quarter, and even if the tariff fight were to be settled, trade is not expected to be a significant driver of growth in coming years.

    (Source: Wells Fargo Economics Group) 

     

(Source: Bloomberg)  

 

-R.W.N II

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