The News that is Moving the Market

It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines:

Payroll Reports

On Friday, the Labor Department reported that 156,000 payroll jobs were created in September, which was below economists’ consensus estimate of 176,000 jobs. The unemployment rate also rose from 4.9% in August to 5.0% in September—economists had expected the rate to remain unchanged. Average hourly wage also rose 0.2% by $0.06 in September to $25.79 per hour. Overall, the September payroll report was neither too hot nor too cold, so the Fed will likely remain accommodative.

On Wednesday, ADP reported that just 154,000 private sector jobs were created in September. This was the smallest private sector job report since April and was below economists’ consensus estimate of 170,000 jobs.

Construction Spending

The Commerce Department this week reported that construction spending declined 0.7% in August. This was well below economists’ estimates, as they had forecast a 0.1% increase. Notably, spending on public construction projects fell 2.0% to the lowest level since March 2014. Spending on private projects decreased 0.3%. Meanwhile, July construction spending was revised lower to reflect a 0.3% decline; it was previously reported as being flat. If there is a silver lining to Hurricane Matthew, it’s that it will help to bolster construction spending as property owners repair the damage.

ISM Manufacturing Index

ISM’s manufacturing index rebounded from 49.4 in August to 51.5 in September. This was a welcome rebound, since any reading over 50 signals an expansion. Especially encouraging was that the ISM new orders component surged to 55.1 in September—up from 49.1 in August—and the production component rose to 52.8—up from 49.6. Overall, many manufacturers surveyed were optimistic, which signaled that business spending may finally be picking up.

ISM Service Index

Meanwhile, the ISM’s service sector index surged from 51.4 in August to 57.1 in September. This was truly a surprise, since economists were expecting a 53.1 reading in September. Breaking it down, the business activity component surged to 60.3 in September—up from 51.8 in August—and the ISM new orders component soared to 60—up from 51.4. This was a truly stunning report.

That’s all I have for you this week; I’ll be back online on Monday with your weekly ratings changes.

Have a great weekend,

Louis Navellier

Louis Navellier

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