Football is back, so I spent the vast majority of the day yesterday parked in front of the TV, taking it all in. My Detroit Lions play in the first Monday night game tonight. Could this finally be the year for the Honolulu blue and silver? I guess the first mission is to take down New York tonight.
On balance, were the market and overall economy winners or losers last week? Or did it end in a sort of mixed tie, as happened for fans in Pittsburgh and Cleveland yesterday? Let’s find out!
ISM Manufacturing Index
In the manufacturing sector, optimism really picked up in August. This index was up more than three points to come in at 61.3.
Digging into the data, new orders were up almost five points to come in at 65.1, the fastest month-to-month growth in this metric since January. Production was also up 4.8 points to 63.3. The cost of materials and labor is also rising, as input costs are at 72.1.
Delivery times are getting longer and backlogs are also increasing at a faster rate, coming in up almost three points at 57.5. While both of these are generally considered bad by consumers, this does have the effect of encouraging hiring to get into the backlog. Employment was up exactly two points to come in at 58.5.
Finally, there was a noticeable increase in inventories of raw materials and less so for finished products. Most industries saw expansion in manufacturing last month. One of the exceptions was primary metals, which was one of the industries targeted early on for tariffs in the ongoing trade dispute with a couple of different nations. That’s something to keep an eye on.
MBA Mortgage Applications
Mortgage applications were down 0.1% overall, as a 1% increase in purchase applications wasn’t enough to make up for a matching decrease in the number of people looking to refinance.
The average rate on a 30-year fixed conforming mortgage was up two basis points to come in at 4.80%. Most people are still looking to purchase at this point, and that makes up 61.3% of application activity at this point.
The U.S. trade deficit was revised slightly lower for June. That’s about where the good news ended in July. The nation’s trade deficit increased 9.6% to $50.1 billion. The goods deficit was up to $73.1 billion, while the services surplus fell a bit to $23.1 billion.
Capital goods exports fell by $1 billion to $46.3 billion, and civilian aircraft exports were down $1.6 billion to $3.5 billion in July. Meanwhile, there was a $900 million drop in exports of foods and feeds to come in at $13.2 billion, and consumer goods exports were down $400 million to $16 billion on the month.
Imports were down for the consumer goods category by $800 million, and the category comes in at $52.6 billion. However, capital goods imports were up $700 million to $58.2 billion, and cars and trucks were up $500 million to $30.7 billion.
Initial unemployment claims were down 10,000 to 203,000 last week, with the four-week average down 2,750 to settle at 209,500. Both of these represent the lowest level since early December 1969.
On the continuing claims side, these were 3,000 lower last week to come in at 1.707 million. The four-week average of continuing claims was also down 13,000 to 1.719 million.
Nonfarm payrolls sought 201,000 jobs added in August, coming in just above expectations for an increase of 195,000 jobs added. The unemployment rate remained steady at 3.9%.
It wasn’t a good month for manufacturing payrolls in the month of August. There were 3,000 jobs cut in the sector along with a matching decline in government payrolls. However, there were 204,000 jobs added in private industry.
Taking a deeper look at a couple of the big gainers, professional and business services added 53,000 jobs, including a 10,000-job gain in people looking for temporary help. Also up quite a bit was the trade and transportation category, adding 37,000 jobs.
In a bit of a downer, the labor force participation rate did go down 0.2% to come in at 62.7%. In a positive sign, average hourly earnings were up 0.4% on the month and have risen 2.9% on the year. Finally, the length of the average workweek remains at 34 hours, 30 minutes.
After holding steady and even inching lower recently, mortgage rates were higher across the board last week. If you happen to be in the market to buy a home or refinance, you should probably strongly consider locking your rate.
The Federal Reserve is expected to raise the benchmark short-term interest rate that strongly correlates with mortgage rates two more times this year, including doing it again as soon as this month.
The average rate on a 30-year fixed mortgage was up two basis points to 4.54% with 0.5 points in fees. This is up from 3.78% at the same time last year.
Looking at shorter terms, the average rate on a 15-year fixed mortgage was down two basis points to 3.99% with 0.4 points paid. This is up from 3.08% in 2017.
Finally, taking a look at the 5-year treasury-indexed, hybrid adjustable rate mortgage (ARM), the average rate was up eight basis points to 3.93% with 0.3 points. Last year at this time, the rate was 3.15%.
The market didn’t have a great week overall, and President Trump said that he had additional tariff plans for China, spooking investors. It was the worst first week of September for the Nasdaq since 2008.
Did you beat the market last week in our Fantasy Stock League? If you’re not participating yet, it’s not too late to enter the contest for prizes.
The Dow Jones industrial average was down 79.33 points Friday to end the week at 25,916.54, down 0.19% on the week. Meanwhile, on the S&P 500 index, stocks were down 1.03% on the week after falling 6.37 points Friday to close at 2,871.68. Finally, the Nasdaq was down 20.18 points Friday to close the week at 7,902.54, falling a weekly 2.55%.
The Week Ahead
Tuesday, September 11
Quicken Loans Home Price Perception Index (HPPI) (10:00 a.m. ET) – Quicken Loans releases data every month comparing what people think their homes are worth to appraisals. Similar opinions of value often make for smoother purchase and refinance transactions.
Quicken Loans Home Value Index (HVI) (10:00 a.m. ET) – Quicken Loans also releases data on home values at both the national and regional levels. Homeowners can gain a perception of whether values are increasing or decreasing and get a better idea of where they stand in terms of equity.
Wednesday, September 12
MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.
Producer Price Index (PPI) (8:30 a.m. ET) – The Producer Price Index measures the average change over time in prices received by domestic producers for the sale of goods and services.
Thursday, September 13
Consumer Price Index (CPI) (8:30 a.m. ET) – The consumer price index measures changes based on the price of a fixed basket of goods and services purchased by consumers.
Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to report the number of individuals filing for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.
Friday, September 14
Retail Sales (8:30 a.m. ET) – Retail sales measure total receipts from stores selling merchandise and related services to final consumers. Sales are measured by retail and food service stores. Data is collected from the Monthly Retail Trade Survey conducted by the U.S. Census Bureau.
Industrial Production (9:15 a.m. ET) – The Federal Reserve’s monthly index of industrial production – and the related capacity indexes and capacity utilization rates – covers manufacturing, mining, and electric and gas utilities.
Consumer Sentiment (10:00 a.m. ET) – The University of Michigan’s Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment is directly related to the strength of consumer spending.
There’s a lot coming up in terms of market moving data next week. We’ll have it all covered next Monday.
Autumn is definitely on the verge of arriving, at least here in Michigan. It was hard to pull myself out of my warm bed this morning. If you find this stuff boring enough to want to crawl back under the covers already, I get it. Fortunately, we’ve got plenty of other home, money and lifestyle articles to share with you if you subscribe to the Zing Blog below. Here are some fall decor tips! Have a great week!
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