Summary for the 11th of March 2019


US nonfarm payrolls increased by 20 000 in February, disappointing the consensus. Last time the nonfarm payrolls increased this small was in May 2016 and September 2017. The market was expecting an increase by 180 000. In comparison, the nonfarm payrolls for January increased by 311 000.

The high volatility in these numbers were mostly due to the government shutdown. The shutdown was the longest in the US history, and 800 000 government workers lost their paycheck in January. Some of those 800 000 workers were covered by government benefits, specifically those who had been furloughed. Some federal employees also had to work without pay, and due to the length of the shutdown, many workers had to find temporarily jobs in January. This led to the non farm payrolls increased in January, and explained the numbers of 311 000. Once the shutdown was over, the workers quit their temporarily jobs, and non farm payroll in February declined sharply.

Non farm payroll -private sectors increased by 308 000 in January, and only 25 000 in February. Average employment for January and February in the private sector was 167 000, weaker than 12 months average. This indicates that employment has been affected by the political uncertainty.

The unemployment rate fell from 4% to 3.8% in February. This shows that the increase in unemployment rate in January was due to the government shutdown, not the weakening in the economics fundamentals. The real unemployment rate, which includes the marginally attached and discouraged workers fell to 7.3%, lowest value since 2001. The labor market is still tightening, because the economic growth is still strong.

Average hourly earnings increased by 3.4%, annually, strongest increase since April 2009. The hourly earnings have been increasing in the past year due to the tightening in the labor market.

As a whole, the employment numbers were positive, this will lead to the Federal Reserve to continue with the contractionary monetary policy. Though, at the moment, the market still expecting 0% of a rate hike this year.

Indices for 11th of March. Little changes in the US stock market on Friday due to weaker than expected employment numbers, the downward adjustment of the global growth and weaker than expected earnings from the energy sector. Expectation of additional economic measures from the Chinese government have lifted the Asian stock markets:

Dow: -0.8% (8th of March)
S&P 500: -0.2% (8th of March)
Nasdaq: -0.2%(8th of March)
Nikkei: +0.4%  (11th of March)
Chinese indices: +3% (11th of March)
STOXX Europe 600 Index: +0.78% (11th of March)

This post is sponsored by my video course in Portfolio Analysis, check it out if you are interested:
Quick and Easy Portfolio Analysis Video Course  (Skillshare)
Quick and Easy Portfolio AnalysisVideo Course  (Udemy)
and Facebook page for other information:
Quick&Easy Financial Economics


Comments

Post a Comment

Popular posts from this blog

Summary for the 2nd of October -Weaker manufacturing outlook

Last week’s flash PMI estimates for the EU area and yesterday’ final PMI numbers are indicating that the weakening in the manufacturing sector isn’t country specific, but rather the weakening is across countries. The decline in Germany’s manufacturing sector is less than expected by the financial markets, while the decline in France is higher than expected. The same goes for Spain and Italy. The UK’s PMI index has increased by 0.9 to 48.3 and is more than expected, though 48.3 still indicates a weaker outlook. The US Manufacturing PMI has increased to 51.1 while the ISM index declines by 1.3 percent to 47.8, the lowest value since 2009. Despite weakening activities in the manufacturing sector for the developed countries, for the developing countries the outlook is still positive. The global PMI value in the manufacturing sector has risen from August to September. Past months’ decline has been due to weaker growth in the global trade. The WTO has updated its global trade forecast
Read more

Summary for the 15th of October

China’s balance of trade shows a fall in exports by 3.2 percent, comparing to a year ago and the imports fall by 8.5 percent, the first fall since May this year. China is the largest contributor to world economic growth, through the weaker imports, China’s economic decline is affecting the rest of the world economy, such as the Euro area. The Euro area’s industrial production for  August has risen by a little more than the markets have expected. The industrial production in the Euro area has been weakening since the start of 2018. Finland is currently holding the council of the EU presidency. At a press conference with the European Council President elect, Charles Michel, the Finnish prime minister, Antti Rinne, says that The EU needs more time to reach a Brexit agreement. Boris Johnson is hoping to seal a Brexit deal before the EU summit on Thursday, so that he will be able to present it to the British Parliament on Saturday for approval, in doing so, he won’t need to postpone B
Read more

Summary for the 21st of October Brexit drama

On Saturday, the British parliament is withholding the final decision of the revised Brexit deal and forcing Boris Johnson to ask the European Council for an extension to the 31 st of January. Instead the parliament has greed on Oliver Letwin’ amendment, which states that there wont be a no deal Brexit until the parliament has agreed on the revised Brexit deal this week. And on Saturday night, Boris Johnson has sent an unsigned letter to the European Council asking for a Brexit delay as well as a personal letter to the Council asking the EU leaders not to delay Brexit. The US stock exchange has closed in negative on Friday after Johnson & Johnson has to recall 33 000 bottles of baby powder in the US after health regulators found trace amounts of asbestos in a bottle purchased online. Boeing has admitted that two of its employers in 2016 misled the FAA about the 737 Max and its technical system. Weaker than expected Chinese economic indicators also contributes to the negative
Read more