Vital Statistics:
Stocks are lower this morning on tensions in the Middle East. Bonds and MBS are down.
There were 8 million job openings at the end of August, according to the JOLTS jobs report. This was an increase of 329k compared to July, although it was 1.3 million lower than last year. Construction and government accounted for most of the increase.
The quits rate, which is a leading indicator for wage growth fell to 1.9%. This means that employees are holding onto their jobs and can be taken as a barometer for sentiment about the job market overall.
Excluding the pandemic noise, the quits rate was the lowest in 9 years, which points to a cooling labor market.
The economy added 143,000 jobs in September, according to the ADP Employment Report. This was higher than expected, and is a touch higher than expectations for Friday’s jobs report. Pay increases were 4.7% year-over-year.
“Stronger hiring didn’t require stronger pay growth last month,” said Nela Richardson, chief economist, ADP. “Typically, workers who change jobs see faster pay growth. But their premium over job-stayers shrank to 1.9 percent, matching a low we last saw in January.”
Mortgage applications fell 1.3% last week as purchases rose 1% and refis fell 3%. “Last week’s incoming data showed an economy that is still growing at a solid pace, even as inflation continues to decline. As a result, mortgage rates were up modestly, with the 30-year fixed mortgage rate increasing slightly to 6.14 percent,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “With this move, refinance application volume declined on the week but remains almost three-times as high as last year’s pace.”
On a year-over-year basis, both purchases and refis are up.
The manufacturing economy continued to contract in September, according to the ISM Manufacturing Survey. “U.S. manufacturing activity contracted again in September, and at the same rate compared to last month. Demand continues to be weak, output declined, and inputs stayed accommodative. Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy — which the U.S. Federal Reserve addressed by the time of this report — and election uncertainty.”
It sounds like the demand issue is global, not just the US, which makes sense given that China is dealing with a burst real estate bubble, which will depress their demand, while Europe continues to deal with sub-par growth.
