We help you stay informed about the financial issues of the day. We keep you abreast of what’s happening in the economy and the markets, and help you understand how that impacts your own personal financial issues. There are many takeaways from this week’s data ending today, October 4th, 2024. It was jobs week, focusing on the labor markets. The biggest news, to me, happened just yesterday evening—the port strike was resolved. The port workers negotiated a 62% pay increase over the next six years. Make no mistake, these costs will be passed along. The latest offer raises the base hourly rate for port workers to $63 an hour, up from $39 an hour, over the next six years. The White House, both privately and publicly, supported the workers’ demand for increased wages. They said that this agreement will extend their prior contract, which is set to expire on January 15th of 2025. So, more negotiations are to come, including discussions on automation on the docks and a few other issues. This is not quite over, but it looks like we have averted a major problem for now. Several economic reports on the jobs market were released this week. First came JOLTS earlier in the week, where we learned that job openings have fallen and pushed the ratio of available positions to unemployed workers down to 1.1 to one. That means there are 1.1 open jobs for every one person willing to work. It seems like a good match, but remember, just a couple of years ago, there were two open jobs for each worker, which is why we saw wages increase significantly. Excluding the brief slump at the onset of the COVID pandemic, the last time the monthly hiring rate was at this level was this summer, at 3.3% of the labor force both in June and August. We also saw the quits rate decline, now at 1.9%. ADP numbers also arrived this week. ADP reported a net gain of 143,000 jobs in the private sector, a company that does payroll for over a million companies and about 25 million employees. ADP’s data showed that 143,000 private sector jobs were added in September, surpassing economist expectations. Those job gains came mainly from medium and large companies. The three-month average for private sector job gains is 119,000 compared to the 143,000 that came in. The six-month average is 143,000, aligning with the 12-month average of 144,000. Small businesses were affected again, with those employing less than 20 workers losing about 13,000 jobs. Information services was the lone category posting a loss of 10,000 jobs. The story remains the same for weekly jobless claims released yesterday. Initial claims rose to 225,000 from 219,000 the previous week, which was 4,000 more than estimated. The four-week moving average was 224,000 versus 225,000 the week before. Continuing claims remained little changed, down 1,000 week over week, still above the 1.8 million level, indicating a modest pace of firings and hirings. What’s behind this? Perhaps gig jobs pay more than unemployment, with roles like driving for Uber or delivering for Instacart offering better positions than unemployment benefits. Also, lost technology jobs over the past year, as Harris mentioned, have come with substantial severance packages, potentially keeping these laid-off workers from filing for unemployment in the short term. The highly anticipated non-farm payroll report was released just minutes ago. The report stated that the U.S. economy added 254,000 jobs in September, much higher than the forecasted 150,000 jobs and the upwardly revised 159,000 jobs from August. This is the strongest job growth in six months, exceeding the average monthly gain of 203,000 over the past 12 months. Employment continued to trend upward in food services, drinking places, healthcare, and government. Healthcare, education, and government job increases are attributed to government spending. Payroll figures for July were revised up, and the change for August was also revised up. With these revisions, employment in July and August combined is 72,000 higher than previously reported. Have we forgotten the over 800,000 job revision from March 2023 to March 2024 where the government got it wrong? The unemployment rate decreased to 4.1% despite expectations to hold steady at 4.2%. Labor participation remained steady at 62.7%. The biggest takeaway is the government might still be overcounting jobs. Next month’s job numbers will likely come in just before Election Day and could be messy. We’ll have the port strike and its implications, which I think will be minimal, but Hurricane Helene might have a significant impact on the employment numbers short-term. Toilet paper manufacturing workers are going into overtime to restock shelves—good news since it’s made in America and not from imports. So far, this week’s market is looking to end in negative territory, but pre-markets turned positive after the jobs numbers were released. They seemed to favor the non-farm payroll numbers, which is surprising. Typically, strong job markets do not support the expectation of aggressive rate cuts going forward. Next, we’ll receive inflation numbers, PPI, CPI, and consumer sentiment. Now that you’re informed about recent and upcoming financial issues, we hope you’ll learn more about how these impact your stewardship. Find out more about integrating these issues into your investment strategy in a biblically responsible way. Managed to fit all of that into the first segment, which is great because we have lots more coming. We hope you’ll stay tuned. We’ll get to your calls next at 610-363-1110.
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