Treasury yields are higher and equity prices lower following the August jobs, which showed higher than expected wage growth over the month. The 10-year yield is back above 2.90%, and S&P 500 futures are down 10 points. A Wall Street Journal article released earlier this morning suggests that a White House decision on more tariffs against China (25% on $200 billion of goods) may not come for weeks. There was much speculation in the markets that the decision would be made this week, but other issues within the administration have likely taken priority.

Nonfarm payrolls added 201,000 jobs in August, 11,000 more than expected, but the prior two months were revised down by a total of 50,000 jobs. However, the big takeaway from the establishment survey was the average hourly earnings data. Average wages jumped 0.4% in August (double expectations), and on a year-over-year basis, wage growth jumped 20 bps to 2.9%. This further cements a September rate hike and increases the likelihood of a December hike as well. The headline unemployment rate held unchanged at 3.9%, but the U-6 underemployment rate dipped 10 bps to 7.4% (new cycle low).

Jason Haley
Managing Director, Investment Management Group

Date Time Event Survey Actual Prior Revised
09/04/2018 Markit US Manufacturing PMI 54.5 54.7 54.5
09/04/2018 Construction Spending MoM 0.40% 0.10% -1.10% -0.80%
09/04/2018 ISM Manufacturing 57.6 61.3 58.1
09/04/2018 ISM Employment 58.5 56.5
09/04/2018 ISM Prices Paid 69.5 72.1 73.2
09/04/2018 ISM New Orders 65.1 60.2
09/04/2018 Wards Total Vehicle Sales 16.80m 16.60m 16.68m
09/05/2018 MBA Mortgage Applications -0.10% -1.70%
09/05/2018 Trade Balance -$50.2b -$50.1b -$46.3b -$45.7b
09/06/2018 Challenger Job Cuts YoY 13.70% -4.20%
09/06/2018 ADP Employment Change 200k 163k 219k 217k
09/06/2018 Nonfarm Productivity 3.00% 2.90% 2.90%
09/06/2018 Unit Labor Costs -0.90% -1.00% -0.90%
09/06/2018 Initial Jobless Claims 213k 203k 213k
09/06/2018 Continuing Claims 1720k 1707k 1708k 1710k
09/06/2018 Bloomberg Consumer Comfort 58 58.3
09/06/2018 Markit US Services PMI 55.2 54.8 55.2
09/06/2018 Markit US Composite PMI 54.7 55
09/06/2018 ISM Non-Manufacturing Index 56.8 58.5 55.7
09/06/2018 Factory Orders -0.60% -0.80% 0.70% 0.60%
09/06/2018 Factory Orders Ex Trans 0.20% 0.40%
09/06/2018 Durable Goods Orders -1.70% -1.70% -1.70%
09/06/2018 Durables Ex Transportation 0.10% 0.20%
09/06/2018 Cap Goods Orders Nondef Ex Air 1.60% 1.40%
09/06/2018 Cap Goods Ship Nondef Ex Air 1.00% 0.90%
09/07/2018 Change in Nonfarm Payrolls 190k 201k 157k 147k
09/07/2018 Two-Month Payroll Net Revision -50k
09/07/2018 Change in Private Payrolls 194k 204k 170k 153k
09/07/2018 Change in Manufact. Payrolls 23k -3k 37k 18k
09/07/2018 Unemployment Rate 3.80% 3.90% 3.90%
09/07/2018 Underemployment Rate 7.40% 7.50%
09/07/2018 Average Hourly Earnings MoM 0.20% 0.40% 0.30%
09/07/2018 Average Hourly Earnings YoY 2.70% 2.90% 2.70%
09/07/2018 Average Weekly Hours All Employees 34.5 34.5 34.5
09/07/2018 Labor Force Participation Rate 62.70% 62.90%