US stocks slumped this week as a weaker than expected jobs report for August was just strong enough to leave the possibility of a rate hike in two weeks on the table. Markets hate uncertainty and now we are looking at a 50/50 chance of a rate hike in September. The 2nd quarter rise in productivity was welcomed because productivity growth had been really slow in this recovery. China imposed controls to keep money from leaving the country. The European Central Bank indicated they are ready to increase their stimulus if necessary to meet its goals of economic growth and inflation of just under 2%. Treasury bonds rose as yields fell. Most commodities fell but oil ended the week higher.
- The U.S. Energy Information Administration reported that oil production in June fell 100,000 barrels a day to 9.3 million barrels. The US EIA has downwardly revised production for the first five months of the year due to new methodology by between 40,000 and 130,000 barrels per day in each of the first five months. This coupled with OPEC signaling a willingness to meet with member countries to talk about adjusting production caused oil prices to rally.
- The Commerce Department reported that total construction spending rose 0.7% from the prior month to an annual rate of $1.083 trillion, a post recovery high. For the trailing three months compared to a year ago construction spending rose 26%.
- Autodata reported that US automobile sales rose to a seasonally adjusted rate of 17.8 million vehicles in August up from 17.3 million a year ago and the best month since July 2005.
- The Institute for Supply Management reported that its purchasing manager’s index fell to 51.1 in August from 52.7 in July. Keep in mind that anything over 50 represents expansion, albeit at a slower pace. The strong dollar was blamed for the slower growth.
- The U.S. Labor Department Reported:
- Worker productivity grew at 3.3% seasonally adjusted annual rate in the second quarter, better than forecasts. From a year prior productivity was up 0.7%.
- Non-farm payrolls rose 173,000, less than expectations. The unemployment rate fell from 5.3% to 5.1%. The prior three months were revised up a total of 44,000 jobs.
- Average hourly earnings of private sector workers rose $0.08 last month a 2.2% increase from a year ago.
- The Institute for Supply Management reported
- The ISM manufacturing purchasing manager’s index fell from 52.7 to 51.1. Keep in mind that anything over 50 represents expansion but this was the slowest rate of growth since May 2013.
- The ISM nonmanufacturing purchasing manager’s index fell to 59.0 in August from 60.3 in July. The July number was the highest since the inception of the nonmanufacturing index in January 2008.
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Loren C. Rex, CFP®, AIF® Erik Smith
Generations Financial Planning & Wealth Management 269-441-4143
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Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
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These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.