Job Openings Outnumbered the Unemployed by More Than One Million
There were a seasonally adjusted 7.01 million job openings on the last business day of September, the Labor Department said Tuesday. That compares with 5.96 million jobless Americans actively looking for work during the month that the unemployment rate fell to a 49-year low of 3.7%.
The number of job openings in September fell slightly from an upwardly revised 7.29 million in August, the highest level on record. In August, openings outnumbered the unemployed by 1.06 million.
Before March, job openings had never exceeded unemployed workers in more than 17 years of monthly records. Most of the decline in openings occurred in the South, the region hit by Hurricane Florence in mid-September. (…)
- While most sectors saw a slight pullback, demand for healthcare workers hit another record high. (The Daily Shot)
(Mortgage Applications Decreased in Latest Weekly Survey
Global PMI holds close to two-year low on weak Europe and China growth
- Growth slows sharply in Europe and China but perks up in US and Japan
- Steepest prices rises seen in Germany and the US
Global business activity grew at a marginally improved rate in October, suggesting the pace of economic growth accelerated for the first time in four months. However, the improvement in part reflected weather-related rebounds in the US and Japan. Even with these rebounds, the rate of increase was the second-weakest seen over the past two years.
Tariffs were a key factor behind a jump in firms’ costs, alongside higher energy prices and rising wages in some countries. Measured across both sectors, input costs showed the second-largest monthly increase since June 2011.
Average selling prices for goods and services also rose sharply again as firms passed higher costs on to customers. The monthly rise in prices charged was just below the survey record high seen in September, moderating slightly in both manufacturing and services.
Among the major economies for which comparable data are available, the steepest rise in selling prices was seen in Germany, followed by the US.
EARNINGS WATCH
Earnings matter more than anything else. We now have 405 reports in and the beat rate is 78% and the beat factor is +6.5%. The beat factor on revenues is +1.4%.
Q3 earnings are now set to jump 27.5% (24.1% ex-Energy) an a 8.4% revenue growth (7.3% ex-E).
Trailing EPS are now $157.40 or $160.00 pro forma the tax reform for 12 months. The $162.67 estimate for 2018 will likely prove too low.
The Rule of 20 P/E is now 19.5 on pro forma trailing and 19.3 on $162.67 on today’s pre-opening of 2775.
Split Congress poses new obstacles to Trump during his next two years in office The outcome tests the appetite of both sides—Democrats in the House and Republicans in the Senate and White House—to work together after years of partisan conflict often marked by personal attacks.
What Gridlock Means For The US Economy: Goldman Sachs Explains
- No major changes on taxes: (…) a proposal making substantial revisions to the 2017 tax reform legislation is very unlikely to attain the 60 votes needed in the Senate, if it even came up for a vote. (…)
- Spending is likely to be extended around current levels: Under a divided Congress, we expect Congress to approve discretionary caps for defense and non-defense spending for FY2020 and FY2021 that are roughly flat in real terms with the spending caps for 2019 that Congress approved earlier this year. While President Trump has called for a 5% cut in discretionary spending—this would work out to around a $65bn (0.3% of GDP) reduction—we expect that Democratic House leaders will insist on a higher level closer to the current level. Note that whatever is decided is unlikely to influence spending trends until 2020, as the spending caps for FY2019 were already agreed to earlier this year. (…)
- An infrastructure deal seems unlikely: A divided Congress is unlikely to enact a major infrastructure program, in our view. While President Trump and congressional Democrats have both supported infrastructure programs, the details differ substantially and, more importantly, Democrats might not be motivated to reach an agreement with the White House prior to the 2020 presidential election.
- Healthcare will be a major issue: Healthcare was listed as a top issue for more voters than any other in exit polling, with 42% listing it as the top issue. The Democratic-majority House is likely to pass drug pricing legislation, but it could be blocked in the Senate. That said, with President Trump also publicly supportive of drug pricing changes, Senate Republicans could come under pressure to reach a compromise on the issue.
- Trade policy should not be directly affected: A Democratic House poses some risk to passage of the implementing legislation for the US-Mexico-Canada Agreement (USMCA), but we expect that the deal would eventually be approved. However, potential opposition could prompt President Trump to initiate the withdrawal process from the current NAFTA, forcing the House to choose between the new deal or none at all. We do not expect the midterm election outcome to change the Administration’s direction on US-China trade policy, where we think additional tariffs in 2019 are more likely than not.
- Little impact on the regulatory agenda: Control of the House has little direct impact on the regulatory agenda, since (1) most House-passed legislation would likely be blocked in the Senate, and (2) most regulatory changes under the Trump Administration have been carried out with existing authority and have not needed congressional approval. That said, it is likely that regulatory scrutiny of some regulated industries (health care, financial services) could increase through House committees.
- Fiscal deadlines become riskier: Fiscal deadlines will become somewhat riskier under a divided Congress, in our view. The next spending deadline is December 7, 2018 (before election results take effect) but this is likely to be pushed to either Q1 2019 or September 30, depending on what Congress decides after the election. Under a divided Congress, there will be a substantial risk of shutdown at the next spending deadline in 2019, though whether it happens will depend on the political environment at that point. The debt limit will be reinstated March 1, 2019 and we expect Congress will need to raise it by August. We note that the two most disruptive debt limit debates in recent memory, in 2011 and 2013, both occurred in a divided Congress.
- No major signal regarding 2020: We do not believe that the midterm election result sends much of a signal regarding the outlook for the 2020 presidential contest. (…)