US: Brace for weaker jobs data – BBH

Analysts at BBH suggest that investors should be braced for weaker US jobs data due to distortions caused by the adverse weather.  

Key Quotes

“This is front and center today with the ADP estimate.  The median forecast from the Bloomberg survey was 135k, down from 237k in August.  The NFP report is expected show around half of the 156k jobs that were created in August.  However, the distortions are not just negative.  Part of the surge in auto sales is due to the response to storms.  Reports suggest that Harvey damaged or destroyed 500k vehicles while Irma took out 200k.”  

“Vehicle sales surged to an 18.57 mln unit pace in September, the highest in a dozen years.  In September 2016, 17.72 mln vehicles were sold at a seasonally adjusted annual rate.  Auto sales in the region that includes Texas rose 14%.  Auto sales rose 109% in the Houston area in the three weeks after Harvey hit compared with three weeks prior.  The strong sales help US-based producers reduce the inventory overhang, which had begun cutting into production.  Inventories fell to 76 days from 88 days in August.”

“US auto stocks have rallied strongly since the first storm hit.  Ford shares are up 16%, GM 24%, and Fiat Chrysler up almost 45%.  The market share accounted for by these three companies has remained amazingly steady.  Last year it averaged almost 78% and was virtually unchanged this year.”