Friday, September 04, 2015

Economics for the Labor Day Holiday

“We do want more, and when it becomes more, we shall still want more.  And we shall never cease to demand more until we have received the results of our labor.

Samuel Gompers

This year U.S. investors are especially keen to get away for the Labor Day end-of-summer week-end.   Usually a sleepy and uneventful period, the month of August turned out to be a tumultuous and unsettling with all U.S. stock market indices diving sharply lower and then lower again.  Trading activity precedents were set and return track records shattered.
 
The August episode will inform investor actions when we all come back to the September scene.  A few facts to ponder on the beach over the holiday week-end:


·        Employers announced 105,605 layoffs in July 2015, a four-year high.  It was no surprise, since employers had been announcing ‘higher-than-last-year’ layoffs for months.  However, in August layoffs shrank to 41,186 jobs  -  61% less than July.  While the number decreased, it did not represent a reversal in trend.  The August layoff was 2.9% higher than the same month last year, becoming the eighth straight month of year-over-year increases in layoffs.

·        The Institute for Supply Management released its Production Index for the month of August 2015, revealing a decrease of 1.6 percentage points from the July reading to 51.1%.  Still the index suggests the U.S. manufacturing sector has expanded for the 32nd consecutive month and the overall economy has grown for the 75th consecutive month.

·        U.S. sales of new autos jumped 5% sequentially in August 2015, driven by robust demand for pick-up trucks and SUVs.  Sales of pickup trucks by the three North American automakers increased 8% in August over July.  Sales in August this year are 4% less than the same month last year, because the Labor Day holiday fell in the last week in August. 

·        Non-farm payroll payrolls increased by 173,000 jobs in the month of August according to the U.S. Labor Department.  The number was well below expectations and represented the smallest gain in five months.  On a more encouraging note, by the end of August the unemployment rate had fallen yet again to 5.1%, the lowest level since April 2008. 

·        Not so impressed with jobs or truck sales or supply chain activity, the Atlanta Federal Reserve revised its forecast of third quarter real Gross Domestic Product growth down to 1.2%. 

Wishing you a fun-filled holiday week-end. 

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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