More Strong Data Sets Up Superlative Shortage
* The ADP Employment Report for September showed an increase of 230,000 private sector jobs.
* The ISM Non-Manufacturing Index for September increased to a very strong 61.6.
* Total Mortgage Applications were unchanged for the week ending September 28.
The ADP Employment Report for September showed another strong monthly job gain consistent with solid Q3 GDP growth. According to ADP, 230,000 private-sector jobs were added for the month. This lifts expectations for the official Bureau of Labor Statistics jobs report for September that will be released Friday morning. The sizeable gains in the ADP data were distributed across all sizes and types of businesses. According to ADP, 56,000 net new jobs were added by small business (less than 50 employees). Medium-sized business (50-499) added 99,000 jobs on net, while large businesses added 75,000. Natural resources/mining increased payrolls by 5,000. Construction added a hefty 34,000. Manufacturing added 7,000. Trade/transportation/utilities gained 30,000 jobs. Information services gave up 3,000. Financial activities added 16,000. Professional/business services added a strong 70,000 jobs in September. Education/health services was up by 44,000 jobs. Leisure/hospitality added 16,000. The ADP report does not have to align with the official BLS numbers, but it is a good first approximation. The BLS data is collected during the week of the month that contains the 12th. This September 12 was a Wednesday and Hurricane Florence hit North Carolina the following Friday. We expect that most businesses in the Carolinas were able to report their employment data as usual, so there will be relatively little impact from the storm on the September jobs numbers.
The ISM Non-Manufacturing Index increased from a strong 58.5 in August, to a very strong 61.6 in September. We are running out of words to describe the numbers. Robust is a good alternative. All ten sub-indexes are above the break-even level of 50, including production, new orders, employment, which all increased in September. Seventeen industries reported growth in September. No industries reported contraction. Anecdotal comments were positive but included concerns about tariffs. Labor and trucking shortages were also reported. As previously reported, the ISM Manufacturing Index for September was just a couple ticks shy of 60 at 59.8 for the month. The combined reading of over 120 for both the ISM Manufacturing and Non-Manufacturing Indexes is a very positive broad indicator of current economic conditions.
The Mortgage Bankers Association’s composite mortgage application index was unchanged for the week ending September 28. Purchase apps were up by 0.1 percent for the week, while refi apps were down by 0.1 percent. Purchase apps are on a positive roll, increasing in each of the last five weeks (not seasonally adjusted). On a four-week moving average basis, purchase apps are up 0.8 percent from a year ago, while refi apps are down 38.4 percent. According to the MBA, the rate for a 30-year fixed-rate mortgage ticked down one basis point to 4.96 percent.
Market Reaction: U.S. equity markets opened with gains. The yield on 10-Year T-bonds is up to 3.10 percent. NYMEX crude oil is down to $74.95/barrel. Natural gas futures are up to $3.22/mmbtu.
For a PDF version of this report, click here: September 2018 ADP Jobs, ISM Non-MF Index, Mortgage Apps
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