Can Jobs Report Still Drive Markets To The Upside In Coming Week?

Friday’s jobs numbers, the closely watched data that can provide a deeper look into the economy, were mostly good, and while the markets took some time to digest them, they initially reacted well. Will that happen again this week?

Markets also cheered a better-than-expected jump in activity at U.S. manufacturing companies, which have been an economic laggard for more than six months. Anemic growth abroad, the strong dollar and flopping oil costs were the culprits of an industry sector that analysts hope is now showing some signs of stability. The Institute of Supply Manufacturing tracked its index at 51.8%, up from 49.5% in February.

But there’s a hitch: manufacturing subtracted 29,000 jobs last month—its biggest one-month pullback since 2009. But construction jobs picked up by 37,000 amid signs of more homebuilding. That was a hitch too, since construction spending retreated in February by 0.5% after a robust 2.1% gain in January, the Commerce Department reported separately. The weakness came in nonresidential activities, like factories and government projects.

Other signs of economic health cropped up too: better retail spending coupled with robust hiring in the sector. Participation in the job market also is on an upward trajectory, inching up to 63% from 62.9%. Better yet, average hourly earnings added $0.07. And though the unemployment rate edged up to 5% from last month’s 4.9%, analysts attributed it to the higher participation rate.

But there’s still a cloud of uncertainty over the markets, something the Federal Reserve Chair referred to a number of times in her speech last week. And then there’s that global growth issue that, so far, has had little impact on the U.S. economy.

While the markets held their own, the dollar climbed, gold dropped and oil prices per barrel were bouncing below $37. Oil futures sunk to a more than two-week low on Friday amid comments from Saudi Arabia raised a flag about whether the crude producer wants in on the efforts to stabilize global output. A major meeting of the oil-producing minds is set for April 17.

Economists were pontificating in the press that the jobs numbers could push the Federal Reserve to raise rates in June but as of midday Friday, the CME FedWatch tool measured only a slight increase to 31% from 30% earlier in the week. A July rate hike probability sits at 44%, while it’s at 54% in September, 58% in November and a strong 68% in December. Some Fed watchers have said they don’t see a hike until the February meeting, which is after the dust has long settled on the presidential elections. Fed funds are putting a 70% probability on that.

The data docket is relatively thinner this week with the minutes of the Federal Reserve Open Markets Committee coming out on Wednesday. Given Friday’s jobs number and last week’s higher-than-expected initial jobless claims, watch, too, for unemployment claims on Thursday.

Auto Prices Heat Up. That’s right, but auto dealers are ramping up incentives to drive down the final cost. Overall, the estimated average transaction price (ATP) for light vehicles in the U.S. was $33,666 in March, according to Kelley Blue Book, the vehicle valuation and information folks. That’s up 2%, or $645, from ATPs last March. According to the Kelley report, Fiat Chrysler models had the highest overall increases, at 3.3% as a group with the Dodge brand up 5% on 9% price jumps on the Challenger and 7% on the Charger. The Toyota Tacoma model had the largest overall hike, by 11%.Toyota’s new Lexus RX prices climbed 6%. On the other end, Volkswagen Group ATPs skidded 4.5%. Overall, the pricey high-end luxury cars accelerated 3.1% to $95,257.

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