Markets were heading lower on Friday as job growth slowed down in July and there was a surprise increase in unemployment. The Labor Department reported that nonfarm payroll grew by 209,000 jobs in July, which was quite less than June’s 298,000. They also upwardly revised May and June’s numbers by an additional 15,000 jobs. July’s data marks the sixth month of positive job gains, something not recorded since 1997. Mohammed El-Erian, chief economic advisor at Allianz, said, “It’s a goldilocks report for an economy that is steadily expanding but not lifting off. It will reinforce for now the Federal Reserve’s commitment to a gradualist policy approach.” There was also a surprise drop in unemployment by one tenth of a percentage point to 6.2%.
Shares of Procter & Gamble Company (PG) were on the rise after reporting a strong quarter and a new trimming of their product line. During their fiscal fourth quarter the company report a boost in profits of 38%. Net income was up to $2.58 billion, or 89 cents per share. Revenue was down to $20.16 million and missed analysts’ expectations of $20.47 billion. P&G also announced that they have plans to cut their product line by nearly half. They are expecting to keep around 70 to 80 of their top products. The company’s CEO, A.G. Lefley, said, “In an ideal world, we would’ve done this at the depth of the financial crisis, in the recession. Having said that, I don’t see any reason to wait. I don’t see any virtue in waiting another minute.”
Auto sales came in better than expected, as the big name automakers reported strong sales. The rise in sales was partially attributed to sales incentives. Chrysler sales were up 20% as the company reported a large demand for the Ram pickup truck. Ford’s sales came in 10% higher after the company said they had an increase in demand for the Escape and Explorer. GM said that they had a 9% sales increase as demand grew for their SUV’s. Jessica Caldwell, an analyst with Edmunds, said, “The key behind this trend is the growth of the compact crossover SUV market. The segment’s share of all sales has nearly doubled in the last decade.” Overall industry sales were expected to come in around 5% that would total 1.4 million, which would mark the best July on the books since 2006.
That’s all for today,
Warren Gates, Normandy Research