U.S. Economy Created 261,000 Jobs in October, Unemployment Rate Ticked Up From 3.5% to 3.7%… The jobs number was higher than the 205,000 forecast, while the labor force participation rate fell slightly from 62.3% to 62.2%.
What it means— Missing the jobs number by 55,000 in an economy of 160 million is a rounding error. It was more telling that the participation rate eased a bit instead of ticking higher, which I would have expected as people went back to work once their stock portfolios dropped. The small amount of softness showed up as slow wage gains, which increased just 0.4% for the month and 4.7% for the year, far below the inflation rate of 8.2%. This report will give the Fed cover to raise rates in December and to stick to its hawkish stance.
The Federal Reserve Raised Rates 0.75%, Will Look at Cumulative Effects as it Considers Future Moves…The central bankers remain committed to slaying inflation but likely will raise rates at a slower pace at future meetings to measure how it is affecting the economy.
What it means— The monetary policy statement seemed to say all the right things for equity buyers, but Chair Powell painted a grim picture in his press conference. Yes, the central bankers might raise rates at a slower pace, but they likely will raise rates longer and to a higher eventual rate than the bankers thought they would have just a couple of months ago. That assessment took the joy out of stocks and sent the indices lower. Powell reiterated that fighting inflation is painful and it’s likely we will get job losses and higher unemployment before it’s over. Meh, maybe. We’ll definitely get volatility through the rest of the year, but we might see inflationary pressure ease by January, which will have the equity bulls jumping in so as not to miss the liftoff.
ISM Manufacturing Index at 50.2, ISM Services Index at 54.4… Readings above 50 indicate growth, while readings below 50 indicate economic contractions.
What it means— The manufacturing index has been sitting near 50 for some time, indicating that consumers are prioritizing experiences over buying more goods. While the services index remains solidly above 50, it’s been declining. Taken together, the indices show that the economy is losing steam.
German Energy Company Is Dismantling Wind Turbine to Expand Coal Mine… Energy firm RWE reported that it is removing at least one wind turbine so that it can expand a nearby lignite, or brown coal, open pit mine. The company plans to bring three lignite-fired units that were on standby back online. A spokesman for RWE called the situation “paradoxical.”
Data supplied by HS Dent Research
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