1)In the BLS September establishment report, the private sector added 877k jobs, 27k more than forecasted. August was revised down by 5k but July was revised up by 45k. The household survey added 275k and that helped the unemployment to fall but more of the reason was the 695k person drop in the labor force. The participation rate slipped by 3 tenths to 61.4% and is back to where it was in July but the employment to population ratio rose one tenth to 56.6%, the most since March when it was at 60%. The all in U6 unemployment rate fell to 12.8% from 14.2%. Hours worked rose one tenth to 34.7 and that matches the most in a few decades as hours worked in manufacturing led the way. Combine this with a one tenth rise in average hourly earnings (one tenth less than expected and August was revised down by one tenth), average weekly earnings rose .4% m/o/m and are up 5.6% y/o/y in part due to mix and manufacturing wages.
2)Initial jobless claims totaled 837k, less than the estimate of 850k and down from 873k last week (revised up by 3k). Continuing claims fell below 12mm to 11.77mm from 12.75mm in the week prior. Those receiving Pandemic Unemployment Assistance rose 650k vs 616k in the week prior.
3)Vehicle sales in September rose at a SAAR of 16.34mm, above the estimate of 15.7mm and up from 15.2mm in August. It printed 17.2mm in September 2019.
4)August pending home sales rose 8.8% m/o/m, well more than the estimate of up 3.1%. Versus last year they are up 20.5%. A 13.1% m/o/m spike out West led the way. The NAR said simply, “Tremendously low mortgage rates, below 3%, have again helped pending home sales climb in August.” But they also said “Home prices are heating up fast. The low mortgage rates are allowing buyers to secure cheaper mortgages, but many may find it harder to make the required down payment.”
5)The July (thus somewhat dated) S&P Corelogic Case Shiller home price index showed a 4.8% y/o/y increase which is great for those that already own a home and are building equity. It is a challenge though for the 1st time buyer that offsets low mortgage rates as those ever increasing prices are mitigating the benefit of lower monthly payments.
6)The September Conference Board Consumer Confidence index was much better than expected, rising to 101.8 from 86.3 and 11.8 pts above the estimate. The Expectations component led the way with a 17.4 m/o/m increase but the Current Situation was higher as well by 12.7 pts. One year inflation expectations remained elevated at 5.7% but that is down one tenth from August. It was 4.5% in March and peaked at 6.6% in June. There was improvement in the labor market questions. Spending intentions grew from August but were mixed when looking over the past few months.
7)The final September UoM consumer confidence index rose to 80.4 from the initial print of 78.9, above the estimate of 79 and higher than the 74.1 print in August. For perspective, it was 89.1 in March and 101 in February. The caveat here is the dichotomy between upper and lower income people. According to the UoM, “the recent gains are encouraging even though they were largely due to upper income households. Indeed, the data indicate that lower income households face continued income and job losses compared with the modest gains expected by upper income households. Also, lower income households more frequently anticipated real income declines.”
8)In the Eurozone, the manufacturing PMI was 53.7 vs 51.7 but as expected and led by Germany which “account for around half of the region’s overall expansion in September. Germany’s performance contrasted markedly with modest production growth in Spain, slowdowns in Italy and Austria, plus a worrying return to contraction in Ireland. Excluding Germany, output growth would have weakened to the lowest since June”.
9)In China, the state sector weighted manufacturing PMI rose to 51.5 from 51 and just above the estimate of 51.3. Services grew by .7 pts to 55.9 which was better than the forecast of a decline to 54.7. That services print is the best since late 2013.
10)The private sector weighted Chinese Caixin manufacturing index was little changed m/o/m at 53 vs 53.1 in August. Caixin said this: “New business expanded at the strongest rate since January 2011, aided by a solid rebound in export sales. Increased activity at home and abroad was reportedly driven by the easing of lockdown measures as the sector continued to recover from Covid. Furthermore, employment stabilized in September, which ended an eight month period of job shedding. However, operating margins remained under pressure, as firms reported a further marked increase in input costs but raised their selling prices only slightly.”
11)Some September manufacturing PMI figures in Asia: Japan 47.7 vs 47.2, Australia 55.4 vs 53.6, Vietnam 52.2 vs 45.7, India 56.8 vs 52, Thailand 49.9 vs 49.7, the Philippines 50.1 vs 47.3.
12)Japan’s September consumer confidence index rose to 32.7 from 29.3 and that was 2.2 pts above expectations. It’s also the best since February but still below that print of 38.3.
13)CPI in Tokyo in September was unchanged y/o/y ex food and energy vs the estimate of -.2%.
14)It’s August data but Japan’s industrial production figure was up 1.7% m/o/m, slightly better than expectations of up 1.4%. Retail sales also exceeded the estimates for August.
15)The Economic Confidence index in September for the Eurozone improved to 91.1 from 87.5 and that was higher than the forecast of 89 and up for a 5th straight month after the 38 pt combined plunge in March and April. All 5 categories saw gains but the biggest one was in the services component which rose 6 pts to the least negative since March.
16)The September Eurozone CPI figure fell .3% y/o/y, one tenth more than expected and the core rate was higher by just .2% y/o/y, half the estimate. Energy prices fell 8.2% y/o/y and non energy industrial goods prices were lower by .3%. Services inflation was up .5%. Keep in mind that a factor in lower prices was the cut in VAT taxes in Germany. Apparel and travel related prices were weak as well.
17)Germany said the number of unemployed in September fell by 8k, 1k more than expected and follows a drop of 9k last month. Their unemployment rate fell one tenth to 6.3%.
18)The French consumer confidence index for September was unchanged with August at 95. That though is better than the estimate of 93 and last month was revised up by 1 pt but, no improvement since the 95 print in April which followed 103 in March and 104 in February
19)Luckily getting more attention, from the SF Fed, //www.frbsf.org/economic-research/publications/economic-letter/2020/september/commercial-banks-under-persistent-negative-rates/
1)Overall payrolls grew by 661k, well below the estimate of 859k but was mostly offset by upward revisions of 145k to the two prior months combined. Government job losses, mostly in state and local government education was the main reason. There was another sharp rise in the ‘Duration of Unemployment’ of 27 weeks or more. In March and April the private sector lost 21mm jobs and we’ve since gotten back 11.4mm so we of course have a ways to go to get back what was lost. Another negative was the continued rise in ‘permanent job losers’ which rose to 3.75mm, the highest since May 2013 as more businesses permanently close. That is up from 3.4mm in August and was 1.28mm in February.
2)The September ISM manufacturing index unexpectedly slipped to 55.4 from 56 and that was 1.1 pts below expectations. New orders fell but remained elevated and backlogs rose along with a 10 yr low in customer inventories. Price pressures continued to rise with prices paid up 3.3 pts and back above 60 at 62.8, the highest since October 2018. In terms of breadth, 14 of the 18 industries surveyed saw growth vs 15 in August. Four saw a contraction vs 3 last month. The ISM said “Manufacturing performed well in the month with demand, consumption and inputs registering growth indicative of a normal expansion cycle. While certain industry sectors are experiencing difficulties that will continue in the near term, the manufacturing community as a whole has learned to conduct business effectively and deal with the variables imposed by the Covid-19 pandemic.”
3)Core PCE rose .3% m/o/m in August after a .4% gain in July and the y/o/y gain is now 1.6% from 1.4% and that was 2 tenths more than expected.
4)Personal spending in August rose 1% m/o/m, two tenths more than expected but July was revised down by 4 tenths.
5)Reflecting the end of the $600 extra per week unemployment benefit, personal income fell 2.7% m/o/m, a touch more than estimated. Transfer payments specifically fell 15% m/o/m (unemployment insurance down 52%). Also, reflecting the challenges of the labor market but showing improvement, private sector wages and salaries fell .4% y/o/y. That though is the least negative over the past 5 months. The savings rate fell to 14.1 from 17.7% in the month prior.
6)Notwithstanding the 5 bp drop in the average 30 yr mortgage rate to a fresh record low of 3.05%, mortgage apps took a breather w/o/w but are still up solidly y/o/y. Purchases fell by 1.9% from last week but are still up 22% y/o/y. Refi’s were down by 6.5% w/o/w but higher by 52% y/o/y.
7)The Japanese unemployment rate in August remained very low but did rise one tenth m/o/m to 3% and that is the highest since May 2017. The jobs to applicant ratio fell again to 1.04 from 1.08 in July and that is the lowest since January 2014. This topped out at 1.63 two years ago.
8)The Japanese Tankan manufacturing and services index improved in Q3 but was still below expectations. Capital spending plans were modest but better than expected at 1.4% for the fiscal year, above the estimate of up .5%.
9)Indonesia’s manufacturing PMI in September was 47.2 vs 50.8 and in Malaysia 49 vs 49.3.
10) In the UK, its manufacturing PMI in September was 54.1 vs 54.3 initially vs 55.2 last month.
11)The Jets are now 0-4.
12)That was some Presidential debate, if you want to call it that.