1)In the August payroll report, the household survey said 3.76mm jobs were added and when combined with the labor force increase of 968k, the unemployment rate fell to 8.4%. The all in U6 rate fell to 14.2% from 16.5%. This was helped by those saying they are ‘self employed’ which rose by 251k and ‘multiple jobholders’ which rose by 182k. Census hiring helped the establishment survey. The work week was 34.6 hours vs 34.5 in the month prior and the participation rate rose to 61.7% from 61.4%, although a hair below the 61.8% estimate. Average hourly wages grew by .4% m/o/m and 4.7% with average weekly earnings up by .7% m/o/m and 5.3% y/o/y.
2)Distorted by new seasonal adjustments, initial jobless claims totaled 881k, 70k less than expected and down from 1.01mm last week. Not seasonally adjusted though saw a rise in claims. Continuing claims, delayed by a week, fell to 13.25mm from 14.49mm in the week prior.
3)The ISM August manufacturing index was a touch above expectations at 56. The estimate was 54.8 and up from 54.2 in July. New orders rose to 67.6 from 61.5 and backlogs were higher too by almost 3 pts to 54.6. A lot of this is the need to replenish inventories which fell to 44.4, the lowest since January 2014 from 47 in July. Employment remained below 50 at 46.4 but up 2.1 pts m/o/m. Exports orders rose by 2.9 pts to 53.3 and imports were higher by 2.5 pts. Prices paid jumped by 6.3 pts to 59.5, the highest since November 2018. Of the 18 industries surveyed, 15 saw growth vs 13 last month. ISM said simply “The PMI signaled a continued rebuilding of economic activity in August.”
4)The tally on auto sales for August yesterday was 15.2mm at a SAAR vs 14.52mm in July. For perspective it was 16.83mm in January and February and got as high as 17.5mm last year.
5)China’s private sector weighted Caixin manufacturing index rose a touch to 53.1 from 52.8 but that is above the estimate of 52.5. Caixin said production and new orders rose and export sales rose for the 1st time this year. Employment was little changed and was a bit below 50 while prices paid and received fell. The services PMI fell to 54 from 54.1 but that was slightly above the estimate of 53.9.
6)The Chinese manufacturing PMI was little changed m/o/m at 51 vs 51.1 in July but business expectations did rise to the highest since May 2018. Services rose 1 pt to 55.2 vs the estimate of no change while expectations were little changed.
7)China’s vehicle sales rose 10% y/o/y in August.
8)Japan’s manufacturing PMI was revised to 47.2, up 2 pts from July. South Korea’s PMI rose to 48.5 from 46.9, Thailand was up at 49.7 from 45.9, Taiwan to 52.2 from 50.6, India rose to 52 from 46 and Indonesia was higher at 50.8 vs 46.9.
9)Japan’s July industrial production and retail sales figures beat expectations.
10)India’s August services PMI bounced to 41.8 from 34.2 but still well below 50.
11)The UK manufacturing index was left basically unchanged at 55.2 from its 1st print of 55.3 but that is up from 53.3 in July. This was “led by an upturn in domestic demand and signs of recovering exports. Business optimism also remained encouragingly robust and close to July’s recent peak.” This though is more reflecting the continued reopening as “companies report that the current bounce is mainly driven by the restarting of manufacturers’ operations and the reopening of clients as COVID restrictions continue to be relaxed.” And this meant “Backlogs of work fell at an increased rate, hinting at spare capacity, and the labor market remains worryingly weak, with job losses registered for the 7th straight month.”
12)The UK services PMI was revised lower to 58.8 from the 1st print but that is up 2.3 pts m/o/m.
13)Germany said the number of unemployed in August fell by 9k, more than the estimate of 2k while their unemployment rate held at 6.4% as expected.
14)The headline August CPI Eurozone rate fell by .2% y/o/y, down from a gain of .4% in July and was led by a decline in energy prices. The estimate was up .2%. The core rate rose by .4% y/o/y, half the forecast of up .8% and down from 1.2% growth in July.
1)The August payroll report’s establishment survey said 1.03mm jobs were added, 300k less than expected and down from 1.48mm in July (revised up by 19k). Manufacturing job growth slowed to 29k from 41k in July and that was less than expected. Construction added 16k jobs vs 27k in the month before. Leisure/hospitality added 174k vs 621k in July. The average duration of unemployment rose to 20.2 weeks from 17.9. The U1 unemployment rate rose to 5.1%, the highest since 2011. The U1 rate measures those unemployed for 15 weeks or more. Those that are working part time because they can’t find full time rose by 91k. Bottom line, the private sector lost 21.2mm jobs in March and April and have since added back 10.5mm.
2)ADP said only 428k jobs private sector jobs were added in August, well below the forecast of 1mm while July’s hiring was only 212k (revised from 167k).
3)Within jobless claims, the number of those collecting Pandemic Unemployment Assistance rose by 151k w/o/w. And there are still 29mm people collecting benefits which equates to an unemployment rate around 18% with a civilian labor force of almost 161mm.
4)The August ISM services index slipped to 56.9 from 58.1 and that was a bit below the estimate of 57. New orders fell by 11 pts m/o/m while backlogs were little changed. Employment remained below 50 but did rise by 5.8 pts. Inventories fell back below 50. Prices paid jumped 6.6 pts to 64.2. Of the 18 industries surveyed, 15 saw growth, the same pace seen in July. ISM said “Respondents’ comments are mostly optimistic and industry specific about business conditions and the economy as businesses are starting to reopen. Industries that have not reopened remain concerned about the ongoing uncertainty. There is a challenge with capacity and logistics due to the pandemic and the impact on deliveries and order fulfillment.”
5)Mortgage applications fell for a 3rd straight week. Purchases were down a hair, by .2% w/o/w but are still up 28% y/o/y. While strong y/o/y, applications for purchases have basically flat lined over the past 5 weeks. Refi’s were down for the 4th week in the past 5, down by 3.1% but still up 40% y/o/y.
6)The July trade deficit fell to $63.6b, the most since 2008. The estimate was $58b and this will trim Q3 GDP forecasts.
7)The Eurozone manufacturing PMI was left unrevised at 51.7 from the 1st print and that is little changed from the 51.8 seen in July. Markit talked about the economic rebound we’re seeing in Q3 and that “Business expectations for output in a year’s time also rose to the highest for over two years as prospects continued to brighten from the unprecedented gloom seen earlier in 2020.” This is the caveat though, “Caution is warranted in assessing the likely production trend, however, as so far it would have been surprising to have seen anything other than a rebound in output and sentiment. Worryingly, order book growth cooled slightly in August, and there are indications that firms are bracing for a near term weakening of demand.”
8)The Eurozone August services PMI was revised up to 50.5 from the 1st print of 50.1 but that is still a slowdown from the 54.7 seen in July.
9)German factory orders in July rose 2.8% m/o/m, about half the estimate of up 5%.
10)Australia’s PMI was revised to 53.6 from the 1st print of 53.9 and that’s down slightly from 54 in July. Also PMI’s on the decline m/o/m were Malaysia, Vietnam and the Philippines, and which all are below 50.
11)Australia’s services PMI fell to 49 from 58.2. Hong Kong’s slipped to 44 from 44.5 while Singapore’s fell by 2 pts to 43.6. Japan’s services PMI was 45 vs 45.4 in July.
12)South Korea’s July IP was less than expected.
13)The Chinese might reduce its holdings of US Treasuries by $200b? That’s fine if we have other buyers for it, hello Fed. But if we don’t…
14)While I grew up a Yankees fan, Tom Seaver was my favorite player. RIP.