● ADP: A moderate rise for US private employment in August
● US factory orders rise on higher auto demand in July
● Fed’s Beige Book: US expansion continues in July and August
● US mortgage applications surged last week
● Gallup’s US Job Creation Index remains at record high in August
● Eurozone y-o-y rise in real retail sales accelerates to 2.7% in July
● Composite PMI: Eurozone economy “resilient” in August

Payrolls at US companies increased by a moderate 190,000 (seasonally adjusted) in August, according to this morning’s monthly release of the ADP Employment Report. The respectable if not particularly impressive gain is slightly below Econoday.com’s consensus forecast for a 210,000 advance. Meanwhile, last month’s rise translates into another round of easing for the year-over-year rate. Nonetheless, today’s numbers are strong enough to fend off worries that a recession is imminent for the US.
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The recent turbulence in financial and commodity markets has cast a dark shadow over the near-term outlook. Not surprisingly, given the depth and speed of the rout, a number of forward-looking markets-based models are signaling more trouble ahead, namely an extended bear market in stocks and perhaps an economic recession for the US and elsewhere. But if there’s still a reason to refrain from throwing in the towel and joining hands with the bears it’s because the broad macro trend for the US remains positive. Is that because the economic numbers arrive with a lag and so the worst is yet to come? Maybe, but that view amounts to guesswork at this point.
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The expected risk premium for the Global Market Index (GMI) fell in August, sliding to the lowest level in recent history. GMI — an unmanaged, market-value weighted mix of the major asset classes — is projected to earn an annualized 3.4% over the “risk-free” rate in the long term. (For details on the equilibrium-based methodology that’s used to generate the forecasts each month, see the summary below). Today’s updated estimate, which is based on data through the close of last month, decreased 30 basis points from the previous projection.
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● US auto sales rise to the highest pace in a decade in August
● US ISM Mfg Index: growth slips to 2-year low in August
● US Mfg PMI: growth at 22-month low in August
● US construction spending rises to post-recession high in July
● PMI: Global mfg output in August decelerates to slowest pace in 28 months

Private nonfarm payrolls in the US are projected to increase by 194,000 (seasonally adjusted) in tomorrow’s August update of the ADP Employment Report vs. the previous month, based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection reflects a modestly stronger gain vs. July’s advance.
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US economic risk increased at the end of August, according to a markets-based estimate of macro conditions. The Macro-Markets Risk Index (MMRI) closed at +0.4% yesterday (August 31) after briefly slipping into mildly negative territory for several days last week. MMRI’s temporary dip into the red in late-August marks the first negative readings since early 2012. It’s important to note that while a markets-based view of the business cycle has turned cautious lately, there’s no confirming support in the hard economic data–at least not based on published numbers to date.
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August was a painful month for most markets around the world. Other than fractional gains in foreign bond markets (mainly in developed countries), last month delivered a deep shade of red ink far and wide. The big loser: stocks in emerging markets (MSCI EM Index), which shed a hefty 9.0% in August–the biggest monthly setback in more than three years.
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● Dallas Fed Index: General Business Activity Index tumbles in August
● Chicago PMI ticks down to 54.4 for Aug, but remains in solid growth territory
● Eurozone PMI: manufacturing activity steady at moderate growth level in August
● China PMI: factory output falls sharply in August
● Eurozone unemployment rate ticks down to 10.9% in August
● Germany’s jobless population falls more than expected in August
● IMF anticipates weaker-than-expected global growth due to China

The ISM Manufacturing Index is expected to tick higher to 53.0 in tomorrow’s update for August vs. the previous month, based on The Capital Spectator’s average point forecast for several econometric estimates. The prediction is moderately above the neutral 50.0 mark and so the current outlook still translates into a forecast of growth for this benchmark of economic activity in the US manufacturing sector.
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