Morning Report: Weak jobs report

Vital Statistics:

  Last Change
S&P futures 4,538 24.2
Oil (WTI) 70.14 1.65
10 year government bond yield   1.29%
30 year fixed rate mortgage   3.05%

Stocks are higher this morning as the Street rows to work. Bonds and MBS are flat.

 

Initial Jobless Claims came in at 340k last week. This is still elevated compared to historical levels and has seemed to be the new normal post-COVID. Separately, there were 15,723 announced job cuts last month according to outplacement firm Challenger, Gray and Christmas.

 

The economy created 374,000 jobs in August, according to the ADP Jobs Report. The Street was looking for 600,000 jobs, so this was a pretty big miss. The consensus estimate for tomorrow’s jobs report is 740,000. It does look like the big acceleration in job growth has petered out.

 

Manufacturing is expanding in the US, according to the ISM Manufacturing Report. New Orders and Production drove the increase, and it looks like pricing pressures are abating.  “Business Survey Committee panelists reported that their companies and suppliers continue to struggle at unprecedented levels to meet increasing demand. All segments of the manufacturing economy are impacted by record-long raw-materials lead times, continued shortages of critical basic materials, rising commodities prices and difficulties in transporting products. The new surges of COVID-19 are adding to pandemic-related issues — worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions and overseas supply chain problems — that continue to limit manufacturing-growth potential.”

 

Productivity in the second quarter was revised downward to 2.1%, while unit labor costs increased to 1.3%.

 

Mortgage Applications fell by 2.4% last week as purchases increased 1% and refis fell 4%. “Despite low rates, refinance applications declined, with some borrowers still waiting for rates to drop even lower,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Recent uncertainty around the economy and pandemic have kept rates low over the past month, which is why the refinance index has oscillated around these levels.”

 

New York State is going to extend the eviction moratorium until January 15.

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