Making Sense: In Brief
The week ahead for markets and the economy
Phil: Markets were again volatile last week as investors continue to digest the prospect of an aggressive Federal Reserve in the face of elevated inflation and slowing economic growth. So let's now look to the week ahead.
The most important data point is Friday's September Nonfarm Payrolls Report. Thus far this year, the labor market has remained remarkably resilient, even as the broader economy has begun to slow. For September, job gains are expected to be around 250,000—still strong, but slower than the 381,000 average of the last 6 months. Also, the unemployment rate should hold steady at 3.7%. In the details, keep an eye on the labor force participation rate, which improved in August. Increasing the number of workers is important to provide some relief to a still-tight labor market that continues to put upward pressure on inflation. Speaking of which, wages are expected to grow 5.1% year over year, a slight decline from 5.2% in August.
And another important report, the September ISM manufacturing survey, is on Monday. This report gives investors insight into the state of manufacturing: everything from orders to shipments to employment to prices paid. The overall index is expected to moderate to 52.4—a slight decline from August, but above the important 50-break-even level, which is indicative of continued activity growth. For the services side of the economy, the ISM Services Index hits on Wednesday, and like its manufacturing sibling, it gives great insight into underlying activity in the service economy. The index is expected to moderate, but a still-healthy 56.5 level.
So, items to watch. One, the employment report. Two, ISM manufacturing. Three, ISM services.
Making Sense In Brief Outro Slide
Brent Ciliano
CFA | SVP, Chief Investment Officer
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
brent.ciliano@firstcitizens.com | 919-716-2650
Phillip Neuhart SVP, Director of Market and Economic Research
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
phillip.neuhart@firstcitizens.com | 919-716-2403
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