October 31, 2019
Tomorrow we get the October jobs number. This report is expected to come in below 100k, and may create some noise.
But with a 3.5% unemployment rate and a jobs market adding new jobs at around 175k a month over the past twelve months, jobs data (at this point) won’t reflect a change of course in the hiring/jobs outlook.
On the other hand, we can see the uncertainty of an indefinite trade war adjusted for by businesses in a more agile way in the manufacturing data — as businesses pull back on new orders and investment, to wait and see. And that has been where we’ve seen the softness.
And we had another soft number today. The Chicago PMI came in at the lowest reading since December of 2015. That happens to be the month the Fed started its normalization/rate hiking campaign.
Here’s what that look like on the chart …
This time around, relative to late 2015, the Fed is going in a very different direction (cutting and expanding the balance sheet).
And, as we’ve discussed, this slump in manufacturing, along with a slide in stocks early this month, is why both parties (the U.S. and China) came to the table to show the markets they were ready to deal – an attempt to reduce if not remove the uncertainty overhang. With the end of October, we’ll see how aggressively a “Phase 1” deal, assuming it gets done, can swing this manufacturing data back in the other direction.