GDP results for the second quarter of 2017 reflect recovery from the soft patch in 2016.
Source: St Louis Fed, BLS & BEA
Nominal GDP for Q2 improved to 3.71%, measured annually. This closely follows our intial estimate calculated from Nonfarm Payroll * Average Weekly Hours * Average Hourly Rate.
Real GDP, after adjustment for inflation, also improved, to a 2.1% annual rate.
Source: St Louis Fed, BLS & BEA
Bellwether transport stock Fedex is undergoing a correction at present but selling pressure appears moderate. Respect of medium-term support at 200 is likely and would confirm the primary up-trend (and rising economic activity).
The Nasdaq 100 gained more than 20% year-to-date, from 4863 at end of December 2016 to 5908 on July 28th. Growth since 2009 has been consistent at around 20% a year but now appears to be accelerating. To my mind that warns sentiment may be running ahead of earnings, increasing the risk of a major adjustment. But there is no indication of this at present.
The S&P 500 continues its advance towards 2500 at a more modest pace. Bearish divergence on Twiggs Money Flow warns of selling pressure but this seems to be secondary in nature, with the indicator holding well above zero.
Target 2400 + ( 2400 – 2300 ) = 2500
From Elliot Clarke at Westpac:
Recent softer gains for nonfarm payrolls cast doubt over labour market momentum, giving cause for some to question whether the FOMC would be able to deliver a first hike before the year is out.
The October report changed that view, with the 271k gain for payrolls taking the month-average pace back up to 206k as the unemployment rate declined to 5.0%.
There is certainly more room for improvement in the US labour market. But subsequent gains need to come at a more measured pace.
We continue to anticipate that a first rate hike will be delivered at the December FOMC meeting.
Read more at Northern Exposure: October payrolls justifies December move
A recent study by economists Katharine Abraham and John Haltiwanger at the University of Maryland, Kristin Sandusky at the Census Bureau and James Spletzer at the Labor Department found “substantial discrepancies” between employee payrolls and the household survey used to calculate Unemployment.
Some 6.4% of people who showed up as holding jobs on employee records were recorded as unemployed in the household survey. Many of them were 65 and older — which suggests they were people who considered themselves retirees even as they continued to draw some sort of paycheck. An even larger 17.6% of people who counted as employed in the household survey didn’t show up on employee records. Many of them had demographic characteristics, such as low education levels, that suggested they were working off the books.
via Did Economy Really Create 500,000 Jobs? – Real Time Economics – WSJ.
The United States economy created a modest number of jobs in October, the Labor Department reported Friday. Employers added 80,000 payroll positions on net, slightly less than what economists had expected. That compares to 158,000 jobs in September, a month when the figure was helped by the return of 45,000 Verizon workers who had been on strike………
The unemployment rate was 9 percent in October, slightly lower than September’s 9.1 percent but little changed from where it has been for the last seven months.
via Report Shows Gain in Jobs but Growth Still Sluggish – NYTimes.com.
Nonfarm payrolls rose by 103,000 in September as the private sector added 137,000 jobs, the Labor Department said Friday in its survey of employers. Payrolls data for the previous two months were revised up by a total 99,000 to show 57,000 jobs were added in August and 127,000 jobs in July. However, the September payrolls data was boosted by a one-time event: 45,000 telecom workers returning to their jobs following a strike at Verizon Communications Inc. in August.
Highlighting the stubborn weakness of the labor market, the unemployment rate—which is obtained from a separate household survey—was stuck at 9.1% for the third month in a row.
via Payrolls Rise as Striking Workers Return – WSJ.com.