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 TimeEventSurveyActualPriorRevised
09/04/2018Markit US Manufacturing PMI54.554.754.5
09/04/2018Construction Spending MoM0.40%0.10%-1.10%-0.80%
09/04/2018ISM Manufacturing57.661.358.1
09/04/2018ISM Employment58.556.5
09/04/2018ISM Prices Paid69.572.173.2
09/04/2018ISM New Orders65.160.2
09/04/2018Wards Total Vehicle Sales16.80m16.60m16.68m
09/05/2018MBA Mortgage Applications-0.10%-1.70%
09/05/2018Trade Balance-$50.2b-$50.1b-$46.3b-$45.7b
09/06/2018Challenger Job Cuts YoY13.70%-4.20%
09/06/2018ADP Employment Change200k163k219k217k
09/06/2018Nonfarm Productivity3.00%2.90%2.90%
09/06/2018Unit Labor Costs-0.90%-1.00%-0.90%
09/06/2018Initial Jobless Claims213k203k213k
09/06/2018Continuing Claims1720k1707k1708k1710k
09/06/2018Bloomberg Consumer Comfort5858.3
09/06/2018Markit US Services PMI55.254.855.2
09/06/2018Markit US Composite PMI54.755
09/06/2018ISM Non-Manufacturing Index56.858.555.7
09/06/2018Factory Orders-0.60%-0.80%0.70%0.60%
09/06/2018Factory Orders Ex Trans0.20%0.40%
09/06/2018Durable Goods Orders-1.70%-1.70%-1.70%
09/06/2018Durables Ex Transportation0.10%0.20%
09/06/2018Cap Goods Orders Nondef Ex Air1.60%1.40%
09/06/2018Cap Goods Ship Nondef Ex Air1.00%0.90%
09/07/2018Change in Nonfarm Payrolls190k201k157k147k
09/07/2018Two-Month Payroll Net Revision-50k
09/07/2018Change in Private Payrolls194k204k170k153k
09/07/2018Change in Manufact. Payrolls23k-3k37k18k
09/07/2018Unemployment Rate3.80%3.90%3.90%
09/07/2018Underemployment Rate7.40%7.50%
09/07/2018Average Hourly Earnings MoM0.20%0.40%0.30%
09/07/2018Average Hourly Earnings YoY2.70%2.90%2.70%
09/07/2018Average Weekly Hours All Employees34.534.534.5
09/07/2018Labor Force Participation Rate62.70%62.90%