U.S. Markets Weekly – August 29 – September 2, 2011

Posted September 6, 2011 by CLeahey

[private][private]DE-USEW-9-2-11MARKET DATA AND THE OUTLOOK

The economy failed to add jobs in August, with the Employment Report printing zero net gains. Even adjusting for special factors such as the Verizon strike doesn’t get us anywhere near to the expected +75K net jobs. The unemployment rate held steady at 9.1% while the workweek was cut to 34.2 hours from 34.3 in July. Hourly wages fell -0.1%, and took an even bigger hit in inflation-adjusted terms. Businesses, like consumers, are registering their pessimism about economic prospects, the debt-ceiling debate, and stock market sell-off by not hiring. It may not actually signal double-dip recession, but concerns that the economy is moving in this direction will grow. Consumer spending was strong in July thanks in part to a rebound in vehicles, but August could be another story given the litany of negative shocks that month. Making matters worse, housing indicators released this week showed no signs of improvement in that market. While this may not be “news” to most investors and policy makers, a weak housing market is a clear negative for the consumer and adds to the list of concerns. The one bright spot this week – if you can call it that – was that the ISM Manufacturing Index didn’t sink into contraction territory like recent regional indices. So the manufacturing recovery remains in tact but vulnerable, especially to a slowdown in global export demand.

[/private][/private]