Stock Market Update

The stock market is on track for a flattish opening as investors assess a broad slate of economic data. 

The ADP Employment Change for August was 54,000 (Briefing.com consensus: 69,000) versus an upwardly revised 106,000 (from 104,000) in June. The goods-producing sector saw an increase of 13,000 positions, while the service-providing sector saw an increase of 42,000 positions. The change by establishment size was modest across the board: small (+12,000), medium (+25,000), and large (+18,000).

The key takeaway from the report is that it reflects a labor market that has weakened but which is not weak per se; nonetheless, this modest change will reinforce the market's rate-cut belief.

Initial jobless claims for the week ending August 30 increased by 8,000 to 237,000 (Briefing.com consensus: 232,000). Continuing jobless claims for the week ending August 23 decreased by 4,000 to 1.940 million.

The key takeaway from the report is that there still isn't a strong weakening message being delivered by initial jobless claims, which were up from the prior week but still remain relatively low on a historical basis.

Q2 productivity was revised up to 3.3% (Briefing.com consensus: 2.4%) from the advance estimate of 2.4%. Q2 unit labor costs were revised down to 1.0% (Briefing.com consensus: 1.6%) from the advance estimate of 1.6%.

The key takeaway from the report is that it hit a sweet spot of signalling stronger productivity growth and a modest increase in unit labor costs.

The July trade deficit widened to $78.3 billion (Briefing.com consensus: -$64.2 billion) from an upwardly revised $59.1 billion (from -$60.2 billion), with exports being $0.8 billion more than June exports and imports being $20.0 billion more than June imports.

The key takeaway from the report is that the surge in imports reflects an easing of some of the tariff pressures that had been applied by the announcement of higher reciprocal rates. The downside, however, is that the net export component will be a negative component in the calculation of Q3 GDP.