Today’s payrolls report from Washington is ugly. The crowd was expecting that today’s jobs report from the Labor Department would show that US companies added 200,000 positions in September. Instead, the release shows that private payrolls increased by a weak 118,000. The good news is that the year-over-year trend is still ahead by a healthy 2.2% through last month. Unfortunately, the annual pace continues to decelerate. Does this add up to a recession signal for the US? No, not yet, but today’s update doesn’t help boost confidence that the worst will be avoided. As I’ve been discussing for the past month or so, macro risk for the US has been rising lately, even if it still falls short of a clear and reliable signal that the business cycle has turned negative (see here and here, for instance). Today’s employment report tips the scales a bit further toward a bearish outlook for the economy.
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The recent market turbulence has knocked the health care sector from its leadership role in performance terms among the major US equity sectors. The crown has passed to consumer discretionary stocks, based on trailing one-year total return data for a set of ETF proxies. Although all corners of the US equity market have lost ground since August, the selling has reshuffled the leadership structure, leaving the Consumer Discretionary SPDR ETF (XLY) firmly at the front of the horse race.
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● US jobless claims rise, but stick close to 15-year low | Bloomberg
● US ISM Mfg Index in Sep slips to lowest level since January | WSJ
● US Mfg PMI in Sep at second-lowest level since Oct 2013 | Markit
● US construction spending in Aug rises to in over 7 years | USN&WR
● US consumer comfort index rises to highest level since mid-Jul | Bloomberg
● Global Mfg PMI growth dips to two-year low in Sep | Markit