Jobs aplenty. Jobs galore. Investors worried about the pros and cons of tariffs. But, they returned to celebrate jobs. Growing jobs and growing orders from business and orders to business provided the back drop of stability behind a stock market that forged ahead (for four days but eventually retreated Friday. Our Quad City Times Key 15 added 100.38 to close at 2451.50. (1)
Wednesday’s jobs report from Automatic Data Processing, with the credibility of being the nation’s largest payroll processor, estimated 235,000 new jobs added nationwide in February. The report beat economists’ consensus estimates and follows similarly bounteous gains of 244,000 in January after 249,000 in December. While the list was led by new leisure, hospitality, and retail sector jobs as consumer spending kicked up, according to ADP, gains of 21,000 construction jobs and 14,000 new manufacturing jobs were exciting, too.
The U.S. Labor Department followed up Friday morning with their impressive estimate of 313,000 new jobs created in February. The reports are not really to be compared. ADP is private sector only, no government. Labor Department numbers are “non-farm” but include government.
Still, sliced any way, job growth is real and persistent. And more workers buy more goods and services, and pay more taxes.
The services sector is humming partly because of job adds. Monday’s report by the services sector purchasing managers shows the strength. That Institute of Supply Management index relaxed just a bit from a 59.9 reading in January to 59.5 in February. The institute says the survey suggests a hearty 59.5 percent majority of purchasing managers are increasing purchases of supplies, solid evidence of their outlook for their businesses in months ahead.
Remarkably, their “new orders” subindex was up 2.1 points to a healthy 64.8 reading, the highest since 2005.
And, switching to manufacturing, the Federal Reserve’s own estimates of factory orders suggest nice growth, too. Its Tuesday report showed orders off a small 1.4 percent from December to January, but up an impressive 8.4 percent compared to one year ago. More orders today likely become more manufacturing in future months, contributing possibly to added workers needed as well.
Closer to home, Kraft Heinz Corporation announced an exciting new initiative on Wednesday morning, as they look for new foods and food brands. Kraft recognizes the disruptive new entrepreneurial efforts in the food and beverage industry. And to help those new efforts, the company launched their “Springboard,” “a platform dedicated to nurturing, scaling, and accelerating growth of disruptive U.S. brands within the food and beverage space.”
They are looking for “inspired founders” to help grow their efforts in one of four pillars: natural and organic, specialty and craft, health and performance, and finally experimental. Founders will be encouraged and helped to continue to lead, helped by support and expertise from Kraft Heinz. The offer for entrepreneurs is remarkable. Kraft Heinz shares were quiet, up just .06 to 67.23. (1)
Paying off debt early is most often a sign of financial strength. And, Arconic, with growing automotive and aerospace aluminum fabrication here, finalized their early redemption of all $500 million of their 5.72 percent bonds due in 2019. They paid holders a premium over face value to retire the bonds at a time when investment grade bonds with short to intermediate maturities could be issued with lesser interest costs. Arconic shares finished the week 1.27 higher at 25.19. (1)
Monsanto looked ahead for growth in Brazil following Thursday afternoon’s release by the company, noting official approval for its biotechnology-engineered soy seed Intacta2 Xtend. Brazilian regulatory body CTNBio gave commercial approval for the seed variety, which is resistant to dicamba herbicide and to most species of the troublesome spodoptera caterpillar. Monsanto plans to start selling the seed variety in 2020 in Brazil. And Monsanto shares gained .78 last week to 123.47. (1)
A new week should bring some new fun. Look to Tuesday’s release of the “small business optimism index” to see just how optimistic they are. That ADP jobs report said 68,000 of those new jobs were in small business.
For added fun, look to see how that 8.4 percent year-over-year jump in factory orders is translating into a manufacturing activity, in Friday’s upcoming report. Both reports could influence investors and investing in area companies and our Quad City Times Key 15.
James Victor is senior vice president-wealth management and financial adviser with Morgan Stanley, Davenport.
The information contained herein has been obtained from sources believed to be reliable, but we do not guarantee its accuracy or completeness.
The Key 15 reflects stocks of local interest. It is not a product and cannot be purchased as one. Information contained herein has been obtained by the writer from sources believed to be reliable, but he does not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
(1) Source: NYSE