The Market Bull – November 1, 2019
The major averages finished with large gains with the media trumpeting the jobs report as it beat expectations, despite the fact that it is fairly weak. Since Monday the Standard and Poors 500 Index is up 35 points or 1.2%, while the NASDAQ has gained 100 points or 1.2% as well.
The October employment report handily beat expectations with 128,000 new jobs as the unemployment rate increased slightly to 3.6%. Average earnings increased .2%. The average workweek was unchanged at 34.4 hours. Previous months were revised higher. The mainstream media was quick to hold this up as “great news” and more proof that “everything is great”. The reality is a little different, over the last 6-months employment gains have averaged 156,000 per month a figure that barely keeps up with growth in the labor force and the 128,000 this month does not. October’s payroll gains were also the weakest in the last 5-months. While negatively impacted by the auto workers strike that took some 42,000 jobs off the table. It is hard to classify this as a strong report, all things considered.
Construction Spending came in soft in August with a .1% gain. Residential construction was strong with a .9% advance, while non-residential or commercial construction came in weak slipping 1%, a second monthly decline. Public construction increased .4% for the month.
The Institute of Supply Managers Manufacturing Index fell for a second month in September slipping to 47.8 as manufacturing contracts. This series has fallen steadily since November of last year. Weakness was broad based; price data has fallen for 4-consecutive months. It would appear that the manufacturing sector is in recession, that said it only makes up about 10% of total economic activity so it’s not that big a deal.
Standard and Poors 500 Index closed at: 3,066.91 up 29.35
NASDAQ finished the day: 8,386.40 up 94.04
Gold ended trading at: $1,515.10 up $.30