The Labor Day Before Labor Day

Estimated reading time: 6 minutes

At a Glance

• The news: The Bureau of Labor Statistics releases the August nonfarm payrolls report on Friday. 
• The context: Friday’s jobs report will serve as one of the final ingredients shaping the Federal Reserve’s September interest rate decision.
• Your move: We could see volatility in interest rate-sensitive assets after the jobs report is released. For instance, a cooler-than-expected report could reinforce expectations the Fed will leave rates unchanged: potentially boosting growth stocks and long-duration bonds. On the other hand, an upside surprise in hiring or wage growth would probably push the odds of a rate hike higher, to the detriment of those same assets.

The jobs report for August marks the return of market-moving macro news.

In particular, economists will be focusing on job growth, wage growth, as well as the balance between labor supply and demand. The last jobs report was mixed, as was the market reaction: On one hand, the economy lost jobs and wages grew less than expected. On the other hand, the unemployment rate fell to its lowest level in over a year. 

Overall, a decisive report would go a long way to dictating market direction, but we haven’t had a ton of clear cut signals in recent economic data. Some Fed officials would probably love to hold off on making any changes at their next meeting, focusing on bigger picture updates to their operational frameworks instead (see Chairman Kevin Warsh’s task forces). If the data forces their hand, however, they may not have the luxury of waiting.

On the Docket

Monday

• 10:30am ET | August Dallas Fed Manufacturing Activity: The Dallas Fed surveys manufacturing executives in the region on business conditions and their outlook.
  

Tuesday

• 5:00pm ET | August Total Vehicle Sales: Cars are a big ticket item for consumers, so underlying vehicle sales trends can help shine a light on demand for durable goods.
•  10:00am ET | August ISM Manufacturing PMI: This index from the Institute for Supply Management tracks how purchasing managers across the manufacturing sector feel about the business environment. 
• 10:00am ET | July Construction Spending: Construction data is a leading indicator of business activity. 
• 10:00am ET | July Job Openings: A key measure of business demand for labor is the number of job openings, since reducing openings is easier and preferable to layoffs. 
• 10:30am ET | August Dallas Fed Services Activity: The Dallas Fed surveys executives in the region’s services industry on business conditions and their outlook.
• Earnings
  • Mega-Caps: Palo Alto Networks (PANW), Dell Technologies (DELL)
  • Large & Mid-Caps: Medtronic (MDT)

Wednesday

• 7:00am ET | Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market. 
• 8:15am ET | August ADP Monthly Employment Report: This survey, usually released a day or two before the official government jobs report, offers insight into private sector employment trends. 
• 10:00am ET | July Factory and Durable Goods Orders: These metrics give insight into underlying trends for leading cyclical indicators.  
• 2:00pm ET |  Fed Beige Book: This report is released eight times per year and tracks the state of the economy based on qualitative information.
• Earnings
  • Mega-Caps: Broadcom (AVGO)
  • Large & Mid-Caps: Hewlett Packard Enterprise (HPE), NetApp (NTAP), Brown-Forman (BFB)

Thursday

• 5:30am ET | August Challenger Job Cuts: The firm Challenger, Gray & Christmas tracks the number of layoff announcements each month by sector. 
• 8:30am ET | July Trade Balance: Trade, made up of exports and imports, is an important driver of economic activity. 
• 8:30am ET | Productivity and Unit Labor Costs: These measures provide a breakdown of how productive workers were per hour of work and at what cost. 
• 8:30am ET | Weekly Jobless Claims: This high-frequency labor market data gives insight into initial and continuing filings for unemployment benefits. 
• 9:45am ET | August S&P Global US PMIs: These indexes track how purchasing managers across different industries feel about the business environment. 
• 10:00am ET | August ISM Services PMI: This index from the Institute for Supply Management tracks how purchasing managers across different services industries feel about the business environment,
• Fedspeak: Fed Governor Christopher Waller will participate in a moderated conversation hosted by Reuters on inflation, the economic outlook, and Fed policy.
• Earnings
  • Large & Mid-Caps: Ciena (CIEN), Lululemon Athletica (LULU)

Friday

• 8:30am ET | August Employment Situation Summary: This monthly blockbuster release from the Labor Department gives a comprehensive look at employment, wages, and hours worked in the previous month.
• Earnings
  • Large & Mid-Caps: Copart (CPRT)

Note: Companies with at least $200 billion in market capitalization are classified as “Mega-Caps,” while others are shown in the “Large & Mid-Caps” sections.

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