{"id":1608,"date":"2019-10-03T14:56:09","date_gmt":"2019-10-03T18:56:09","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1608"},"modified":"2019-10-03T14:56:09","modified_gmt":"2019-10-03T18:56:09","slug":"september-nonmanufacturing-activity-manufacturing-orders-layoff-announcements-weekly-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1608","title":{"rendered":"September NonManufacturing Activity, Manufacturing Orders, Layoff Announcements, Weekly Jobless Claims"},"content":{"rendered":"\n

KEY DATA:<\/strong>  ISM (NonMan.): -3.8 points; Orders: -6.6\npoints; Employment: -2.7 points\/ Manufacturing Orders: -0.1%; Backlogs: +0.1%\/\nLayoffs: 41,557\/ Claims: +4,000<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cThe manufacturing sector is contracting but\nthe service sector is still expanding enough to keep growth at a modest to\nmoderate pace.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  While few economists, including myself,\nexpect a recession to start this year, next year is a different story.  Whether we do wind up in one will depend upon\nthe service sector as the trade war has already claimed its first major victim,\nthe manufacturing sector.<\/em><\/strong>  Thus,\nwe need to watch carefully the trend in services.  Right now, it is slowing, which should\nsurprise no one.  The Institute for Supply\nManagement\u2019s NonManufacturing Index fell sharply in September, but that came\nafter a surprisingly large rise in August. <\/em><\/strong> The September level, though, did drop a little\nbelow the July number, meaning all of the August gain, and more, was wiped out\nin September.  The business activity, new orders\nand employment components were all off sharply.<\/em><\/strong>  In addition, prices paid for goods and\nservices rose even faster, not a good sign for either inflation or\nearnings.  The report, though, was not all\ndoom and gloom.  Backlogs increased and\nthat holds out hope that the easing in growth will stabilize in the months to\ncome. <\/em><\/strong><\/p>\n\n\n\n

Speaking of manufacturing, orders for all types of\nproducts declined in August.<\/em><\/strong>  While demand\nfor durables rose a touch, demand for nondurables fell moderately<\/em><\/strong>.  That is a further sign that growth is softening.<\/p>\n\n\n\n

As for the labor market, Challenger, Gray and\nChristian reported that layoff notices were down<\/em><\/strong> sharply not just from\nAugust, but also from September 2018. \nStill, so far in 2019, notices are still up nearly 28% from the first nine\nmonths of 2018.<\/em><\/strong>  That is somewhat\nsurprising given the shortage of workers. Restructuring, closing, bankruptcy\nand cost cutting explain about 65% of the layoff announcements, which makes\nsense given the issues in retail and other industries.<\/p>\n\n\n\n

Jobless claims rose a touch last week but\nremain extremely low.<\/em><\/strong>       <\/em><\/strong>MARKETS AND FED\nPOLICY IMPLICATIONS:<\/strong>Yes,\nthe economy is slowing.  No, it is not in\nrecession and there is no reason to believe it will go into the red this year.<\/em><\/strong>  But it cannot be said that conditions are\nstrong.  Indeed, it will take continued strong\nconsumer spending to keep the economy out of a downturn.  Can households keep it up?  That will depend upon both job and wage\ngrowth.  And that is why, when all is\nsaid and done, the key numbers are to be found in the monthly employment\nreport.<\/em><\/strong>  We get the September data\ntomorrow and consensus is for about 150,000 or so.  The huge surge in government employment in\nAugust is likely to have been unwound in September and that makes it harder to\nget a handle on the headline number.  So look\nmore closely at the private sector job gains.<\/em><\/strong>  In August, they came in below 100,000 but\nshould be slightly above a September headline 150,000 number.  That would be okay but nothing great. That\nis, it would be consistent with a still growing, but slowly moderating growth\npace.  But also pay close attention to the\nunemployment rate, which I think might tick up to 3.8%.  That could worry investors.<\/em><\/strong>  Another concern is wage gains, which should\nbe at 0.3% over the month and 3.4% over the year.  Failing to meet those increases would\nindicate earnings gains are moderating as well and that would be an even\ngreater warning sign.  As for investors,\nthey cannot be happy to see the services sector slowing.  But they can take hope that it is still expanding\nenough to keep the economy moving forward. \n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  ISM (NonMan.): -3.8 points; Orders: -6.6 points; Employment: -2.7 points\/ Manufacturing Orders: -0.1%; Backlogs: +0.1%\/ Layoffs: 41,557\/ Claims: +4,000 IN A NUTSHELL:  \u201cThe manufacturing sector is contracting but the service sector is still expanding enough to keep growth at a modest to moderate pace.\u201d WHAT IT MEANS:  While few economists, including myself, expect … Continue reading September NonManufacturing Activity, Manufacturing Orders, Layoff Announcements, Weekly Jobless Claims<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1608","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1608","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1608"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1608\/revisions"}],"predecessor-version":[{"id":1609,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1608\/revisions\/1609"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1608"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1608"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1608"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}