The deceleration of job growth continues since the collapse in oil capex:

Highlights

The labor market is solid but maybe isn’t overheating, at least yet. Nonfarm payrolls rose a lower-than-expected 151,000 in August with revisions to July and June at a net minus 1,000. The unemployment rate holds at 4.9 percent with modest increases on both the employment and unemployment side of this reading. Earnings are very soft in this report, up only 0.1 percent in the month for a year-on-year plus 2.4 percent which is down a sizable 3 tenths from July and isn’t pointing to any wage-hike flashpoint. And the workweek is down, at 34.3 hours with July revised 1 tenth lower to 34.4.

Goods producing payrolls are down across the board reflecting weakness in mining, construction and manufacturing. But service sector jobs are once again strong and include further gains for professional & business services as well as a 25,000 increase in government jobs.

There are definitely weak spots in this report though the headline payroll gain of 151,000 is respectable but isn’t high enough to give the hawks the advantage at this month’s FOMC where a rate hike will, at least, be discussed.

It’s been an ‘L’ shaped recovery, at best:

Wage growth can’t even get back to levels of the last recession:

Still in contraction vs last year, and inventories remain far too high:

Highlights

The early indications for August are soft to mixed but July was definitely a solid month for the factory sector. After monthly declines of 1.2 and 1.8 percent in May and June, factory orders surged 1.9 percent in July for the best gain since October last year.

Orders for core capital goods (nondefense ex-aircraft) were especially strong in July, up 1.5 percent following June’s 0.5 percent gain in readings that upgrade what has been a very soft outlook for business investment. Aircraft, which is always volatile in this report, is July’s biggest plus, surging 90 percent in the month. But vehicles are a negative in the report, down 0.5 percent.

Other negatives include factory shipments which slipped 0.2 percent and include a 0.5 percent decline in shipments of core capital goods. The latter decline is an immediate negative for the nonresidential fixed investment component of the GDP report though the big order gains in July and June for core capital goods point to future strength for this reading. Factory inventories are stable and lean, edging 0.1 percent higher in the month to keep the inventory-to-shipments ratio unchanged at 1.35.

This report is mostly solid but is a bit dated. This morning’s employment report showed a decline in factory hours which points to a retreat for manufacturing in the next industrial production report, a report which, like factory orders, showed strength in June and July. On net, the factory sector doesn’t look like it will be contributing much to second-half economic growth but it doesn’t look to be a negative either.

The downtrend looks intact, and on the edge of contraction:

Highlights

Markit’s U.S. manufacturing sample continues to report month-to-month growth but slow growth. The PMI for August came in at 52.0 which is only modestly above the 50 level that divides monthly growth from monthly contraction. Growth in new orders slowed which is a key negative in the report, along with slowing in employment. The sample is also cutting its inventories which points to lack of confidence in the business outlook. Price data are flat which is yet another indication that demand is soft. But there are positives including strength in production, which however won’t last long if orders remain weak. And there’s an important indication of strength in orders as new export orders posted a rare gain. This report in sum points to no better than flat conditions ahead for manufacturing.

This one went negative:

Highlights

August was a disappointingly flat month for ISM’s manufacturing sample where the composite index posted its first contractionary sub-50 reading since February, at 49.4 for a more than 3 point decline.

Details are likewise soft including new orders which, after a long solid run, fell nearly 8 points to 49.1 for their first sub-50 score since December. And backlog orders are in deepening contraction, at 45.5 for a 2.5 point decline. Production is just below 50 as are inventories and also employment, which at 48.3 is under 50 for the eighth time in nine months.

This report has been very solid in recent months especially new orders, important considerations that limit August’s negative indications. Factory data have been struggling all year and this report takes some of the shine off very solid government reports in July when both industrial production and durable goods orders posted good gains. Watch for July factory orders on tomorrow’s calendar.

The deceleration is obvious:

Mortgage purchase applications are now down to only 5% higher than a year ago:

A lot worse than expected:

Highlights

Business growth has slowed in Chicago this month based on the city’s PMI which fell more than 4 points but, at 51.5, is still over breakeven 50. New orders slowed while backlogs fell sharply and into sub-50 contraction. Production also slowed while inventories were drawn down. Employment posted a gain and is the strength of the August report, strength however that isn’t likely to improve further unless orders rebound.

The downward slope in year over year growth since oil capex collapsed continues:

Large downward revision to June, and July remains suspect for another month when it gets revised. Meanwhile, the year over year numbers show little or no growth, much like the growth in permits for new construction:

Highlights

Pending home sales jumped higher in July but from a June that is now revised sharply lower. The July index came in at 111.3, a level that is only marginally above June’s initial reading of 111.0 but is 1.3 percent above the revised level of 109.9. The index hit a recent peak in April at 115.0.

Looking at the year-on-year rate, pending sales are up 1.4 percent which doesn’t point to much acceleration ahead for final sales of existing homes where this rate in July slipped into the negative column for the first time in two years.

Regional data show the West out in front after a sharp rise in July, at a year-on-year plus 6.2 percent followed by the Northeast at 1.1 percent and the South at 0.4 percent. The Midwest is only the region in the negative column, though only at 1.1 percent.

Sales of existing homes aren’t showing the life that sales of new home sales are showing though strength in the latter does point to strength ahead for the resale side.

In line with expectations as real disposable income growth remains at or below ‘stall speed’, as per the charts. And the total growth of that measure of income since the 2008 peak remains very low. On the consumption side, the mini jump in auto sales provided the (small) boost for the month, though down year over year, and auto sales forecasts for August are all pointing to a resumption of weakness:

Highlights

Income picked up slightly in July and consumption slowed slightly in what was another constructive month for the consumer.

Personal income rose 0.4 percent in the month with June revised 1 tenth higher to plus 0.3 percent. Income got another solid boost from wages & salaries which rose 0.5 percent for a second straight month. The consumer put some of this money into the bank with the savings rate rising 2 tenths to 5.7 percent.

Consumer spending rose 0.3 percent in the month following 0.4 percent gains in the prior two months. Spending on durables got a big boost from the month’s strong auto sales while non-durables were pulled down by price effects for energy. Service spending was solid but down slightly from prior months.

Price data are not showing any pressure, unchanged in the month for the overall PCE price index and up only 0.1 percent for the core index (ex-food ex-energy). The year-on-year rate for the core PCE, which is the Fed’s central price gauge, is unchanged to extend a long string, stuck at 1.6 percent.

The respectable showings for income and spending are no surprise given the strong employment report for July, strength that is the underpinning of the consumer. The outlook for August will unfold this week, with vehicle sales on Thursday and the employment report on Friday.

Production up a bit but General Activity Index down:

Highlights

There’s as many positives as negatives in the August manufacturing report from the Dallas Fed, which is a plus since negatives usually dominate this report. The production index rose more than 4 points to 4.5 while the new orders index jumped more than 13 points and is in positive ground at a modest but still respectable 5.3. Another positive is the future assessment of general activity, in positive ground for three months in a row and at 7.0 in August.

But there are negatives including the current assessment of general activity, falling nearly 4 points to minus 6.2 for the 20th straight negative result. Employment is at minus 5.0 and hours worked edged lower. Price data show pressure for inputs but continued declines for selling prices, all at the same time that wages & benefits continue to rise.

This along with the Kansas City Fed report have been depressed the past 2 years due to the drop in energy prices. But today’s report, though no better than mixed, does show signs of improvement, in a reminder of last week’s solid strength in the durable goods report.

United States Dallas Fed Manufacturing Index

The Federal Reserve Bank of Dallas’ general business activity index for manufacturing in Texas came in at -6.2 in August of 2016 from -1.3 in July, worse than market expectations of -3.9. Production (4.5 from 0.4 in July); new orders (5.3 from -8) and shipments (9.9 from 0.1) improved while job creation (-5 from -2.6) and hours worked (-4.5 from -0.2) worsened. The index of general business activity for the next six months fell to 7 from 18.4.

More evidence the wheels are coming off, not that there have been any doubts…

From WardsAuto: Forecast: U.S. Light Vehicles Sales Weaken in August

A WardsAuto forecast calls for August U.S. light-vehicle sales to reach a 17.4 million-unit seasonally adjusted annual rate, less than like-2015’s 17.7 million and July’s 17.8 million, but ahead of the 17.2 million recorded over the first seven months of this year.

From J.D. Power: August Decline in New-Vehicle Sales Fourth in Last Six Months

The SAAR for total sales is projected at 16.8 million units in August 2016, down from 17.7 million units a year ago.

Read more at http://www.calculatedriskblog.com/#vt6cCRe2JUOvoVoB.99

This chart is through July:

This keeps decelerating as well:

This is not about one month’s numbers. It’s been a full retreat ever since the collapse of oil capex at the end of 2014, with no sign yet of anything but more of same until deficit spending- private or public- picks up sufficiently to offset the ‘normal’ amount of unspent incomes.

And as previously discussed, it wouldn’t surprise me if future revisions show that the recession started a year ago or maybe even before that.

Bad news for housing today- mtg purchase apps at the lows of the year, prices moderate, and existing home sales weak, so, as previously discussed, not looking like housing will be contributing to growth this year: