I’m traveling so updates are light, but here’s a brief round-up of some of today’s news:
- The labor report was much better than expected. Private payrolls jumped 172K vs expectations of 110K. The unemployment rate jumped to 8.3%. The bottom line is: this is not recessionary data by any means. It’s not a great expansion, but it’s also not contraction. Muddle through continues.
- The ISM Services report showed a 52.6 reading. That was better than the 52 analysts expected. Again, this is expansionary data. Econoday has a nice summary:
“The great bulk of the nation’s economy is moving steadily forward, based on ISM’s non-manufacturing sample where the composite index rose 5 tenths to 52.6. This level isn’t that strong but details in the report are encouraging led by new orders which rose 1 full point to 54.3. This is right in line with the 4-month average of 54.2. Business activity, which is an indication on output of goods and services in the sample, really took off, up 5.5 points from a depressed June level to 57.2 in July for the best rate of monthly growth since March.
A negative in the report is a 3 point fall in the employment index to 49.3, a sub-50 level, which is the first of the year and which indicates that the ISM’s sample, on net, cut back on their workforce in July. But the rise in new orders hints at a snap back for this reading in the months ahead.”
Overall, the US economy continues to look like an okay house in a really bad neighborhood. The labor report in particular was nice to see, but I have to admit that it’s sad that the market could become so exuberant over such an OKAY reading. But that’s the economy for you. Everyone has been expecting a disaster scenario or a recession scenario so “not horrible” is the current version of “better than expected”.