Premarket stocks: The September jobs report is high stakes for investors

October 4, 2019 Off By administrator
A surprisingly weak reading from the Institute for Supply Management’s manufacturing index has already heightened Wall Street’s blood pressure. Fears of a spillover into the wider economy were reinforced Thursday when the ISM said its non-manufacturing index, which measures activity among service providers such as banks, restaurants and hotels, fell to its lowest level since August 2016.

Feeding concerns: A disappointing report on private sector employment from payrolls company ADP. The sell-off tied to the ISM data deepened after the firm said 135,000 private sector jobs were added in September. That’s 5,000 fewer jobs than had been expected. August numbers were also revised lower.

“Businesses have turned more cautious in their hiring,” said Mark Zandi, chief economist at Moody’s Analytics, said in a statement released by ADP. “If businesses pull back any further, unemployment will begin to rise.”

The ADP miss only heightens attention on the September US jobs report, which posts at 8:30 a.m. ET. Economists surveyed by Reuters expect non-farm payrolls — jobs added excluding agriculture and private household workers — to rise by 145,000. That’s higher than last month’s increase of 130,000, and the US unemployment rate is forecast to hold steady at 3.7%. These numbers are still solid.

But investors will certainly be scrutinizing the data for any signs of weakness — especially in manufacturing — or seasonal trends that mask underlying softness.

One example: Bank of America Merrill Lynch points out that, just as in August, the nonfarm payroll figure will likely be buoyed by the hiring of temporary census workers.

Once the jobs report hits, expect conversation to shift toward two topics: the strength of the American consumer, and what the data means for the Federal Reserve.

“Markets are clearly spooked about the state of the US economy and worried that Friday’s jobs report will disappoint,” said Nicholas Colas, co-founder of DataTrek Research. “Fair enough: Job growth has been slowing and there have been two prints below 100K just this year.”

But, he points out, “no matter what Friday’s report may show, the US consumer is still in decent shape.”

About the Fed: Société Générale said earlier this week that it expects the another interest rate cut in October or December. The quality of the jobs numbers, it said, could dictate the timing.

Business can’t wait for politics to fix itself

Here’s a dispatch from our CNN Business colleague Julia Chatterley in New York. Julia presents a daily markets show, “First Move,” at 9 a.m. ET on CNN International.

“This month, as anyone in New York traveling by car will tell you, the UN General Assembly came to town. The annual event invigorates and paralyzes the city in equal measure.

In a way, it’s a metaphor for the relationship between business and government. This year’s UNGA week was a near perfect encapsulation of the sclerotic nature of politics in 2019. Take your pick from a US impeachment inquiry,…

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