U.S.: Strong jobs report, but tepid otherwise

3 min
Dan North
Dan North Senior Economist for North America

The economy created a very strong +312k jobs vs. expectations of +170k, and the prior two months were revised up +58k. On a y/y basis job growth rose from +1.70% to +1.79%, the most in over two years. The unemployment rate rose +0.2pp to 3.9%, driven by a surge in the labor force of +419k, bringing the 2018 total to +2.6 million, the most of the recovery. Wages held steady at +3.2% y/y. Fed Chair Powell gave yet another dovish speech, boosting financial markets. But data from early in the week continued a string of tepid reports. The ISM manufacturing index dropped a sharp -5.2 points to 54.1, the biggest decline in over 10 years. It’s still above 50 indicating expansion but the critical new orders component fell -11.1 points to 51.1. Separately, construction spending fell for the third consecutive month. The shutdown of one-quarter of the government entered its 18th day, for now putting a very minor drag on the economy.