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Nonfarm Payrolls Disappointment and Service PMI Numbers In Focus

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The last day of trading before the Labor Day long weekend and the end of summer holidays finds US index futures sliding into the red following today’s US job numbers after being slightly positive for most of the morning. Overseas market action has been mixed with the Nikkei climbing 2.0%, the FTSE gaining 0.4%, the Dax flat and the Hang Seng sliding 0.7%. Currencies are quiet as are commodities with WTI crude oil up 0.3% trading just above $70.00/bbl and copper slipping 0.2%.

Even though a potential miss by US nonfarm payrolls had been suggested by Wednesday’s ADP payrolls miss, today’s report came in well below expectations (235K vs street 750K). Part of this can be explained by an upward revision to last month’s number (1,053K vs previous 943K). Adding to the ominous news, average hourly earnings (4.3% vs street 4.0%) were above expectations and continued to rise, indicating growing wage inflation. Overall these two numbers were mixed in terms of their impact on Fed policy with the headline job number leaning dovish and the wages number leaning hawkish.

European economic numbers have been sluggish this morning. Service PMI reports landed in the 55-60 range this morning, indicative of a moderate expansion but also generally a bit worse than expected. Eurozone retail sales missed by a lot (3.1% vs street 4.8% and previous 5.4%) slowing even more sharply than investors had thought.

US Non-Manufacturing PMI is due at 10:00 am EDT (street 55.2 unchanged). Investors may also keep an eye on the prices paid component (street 81.6 vs street 82.3) as an inflation indicator and the new orders component (street 61.7 vs previous 63.7) as a leading indicator.  

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

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Colin Cieszynski, Chief Market Strategist
Market Commentary:

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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