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Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

All Eyes On This Morning's Employment Report

Stocks closed mixed yesterday with the Dow and the S&P closing modestly to slightly lower, while the Nasdaq finished slightly higher.

That's a fine performance after Wednesday's sharp upside gains that saw the Nasdaq up over 4%, and the S&P up over 3%.

It should also be noted that, technically, the Dow exited their bear market on Wednesday, as they closed up by more than 20% from their bear market low close. (Up 20.4% to be exact.)

Yesterday's Personal Income and Outlays report showed Personal Income up 0.7% m/m, while Personal Consumption Expenditures (PCE) was up 0.8% m/m. But the item everyone was really focused on was the PCE Index, as that is a favorite inflation gauge used by the Fed. On a m/m basis, it was up 0.3% vs. last month's change of 0.3% and views for 0.4%, while y/y it came in at 6.0% vs. last month's 6.2% and views for 6.0%. The Core PCE Index (ex-food & energy), was up 0.2% m/m vs. last month's 0.5% and estimates for 0.3%. And on a y/y basis, it came in at 5.0% vs. last month's 5.1% and the consensus for 5.0%.

All in all, that was a better than expected reading which showed inflation continuing to moderate. Nothing huge, but moderation nonetheless.

In other news, the PMI Manufacturing Index came in at 47.7, up a bit from last month's 47.6.

The ISM Manufacturing Index, however, slipped a bit to 49.0 from last month's 50.2 and estimates for 49.5.

Construction Spending was down -0.3% m/m vs. last month's 0.1% and views for -0.1%. On a y/y basis, it was up 9.2%. Solid number, although down from last month's pace of 10.2%.

The Challenger Job-Cut Report jumped to 76,835 vs. last month's 33,843.

And Weekly Jobless Claims declined by -16,000 to 225,000 vs. the consensus for 238K.

But the jobs report people are really waiting for is this morning's Employment Situation Report by the Bureau of Labor Statistics (or BLS). The consensus is looking for 200,000 new jobs (that's 200K from the private sector and zero additions or deletions from the public). The unemployment rate is expected to stay the same at 3.7%, while the Participation Rate is expected to tick up from 62.2% to 62.3%.

Wednesday's ADP Employment Report of 127,000 private payroll jobs, missed the consensus for 200K. While the ADP report has a spotty track record in foreshadowing what the BLS report will say, it did show a miss.

The BLS report comes out at 8:30 AM ET.

Could be a busy day.


Kevin Matras

Executive Vice President, Zacks Investment Research


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