THE MONTH IN BRIEF
October certainly lived up to its reputation for volatility. The S&P 500 suffered its second correction of the year as investors wondered if they were seeing early signs of the peak of the current business cycle, absorbing news of moderating corporate earnings, while also considering the potential impact of higher interest rates and tariffs. Real estate indicators, for the most part, left much to be desired; labor, manufacturing, and consumer spending and confidence indicators were in better shape. Overseas, major and minor reductions in economic growth were forecast for various nations. In the commodities sector, oil and gasoline posted major losses.1
DOMESTIC ECONOMIC HEALTH
Housing aside, the domestic economic data arriving in October ranged from middling to excellent. The Institute for Supply Management presented its latest manufacturing purchasing manager index; the September reading was 59.8, down from the previous mark of 61.3, but still superb. ISM’s non-manufacturing PMI reached an all-time peak of 61.6, rising 3.1 points from its August level.2
In a notable miss, the Department of Labor’s September employment report showed U.S. non-farm payrolls adding 134,000 net new hires. Economists surveyed by Bloomberg projected the gain at 185,000, and some wondered if Hurricane Florence might have affected the total. Headline unemployment fell 0.2%, however, to a remarkably low 3.7%. The jobless rate had not been that low since the end of the 1960s. The U-6 unemployment rate, which counts both the unemployed and underemployed, ticked south 0.1% to 7.4%. Another bright spot: the upward revision of the previous two months of hiring totals. The July jobs gain was boosted by 18,000 to 165,000; the August gain was upgraded from 201,000 to 270,000.3,4
