- Non-farm payrolls rose by 187,000 in July
- Fitch Ratings downgraded the U.S. government credit rating from AAA to AA+
- The ISM Manufacturing Index registered 46.4% in July
Top Three Market Headlines
July Jobs Report Misses Expectations: The Labor Department reported last week that employers in the U.S. added 187,000 jobs in July, fewer than economists' expectation of 200,000. Previously-announced totals for May and June were also revised downward by a total of 49,000. Monthly job gains have now tallied less than 200,000 for two straight months, hinting that labor market conditions may be starting to cool off. Meanwhile, the unemployment rate for July registered 3.5%, down marginally from 3.6% in June, while average hourly wages rose at a 4.4% annual pace, unchanged from the prior month.
United States Credit Rating Downgraded by Fitch: Fitch Ratings last week downgraded the U.S. government's credit rating one notch from AAA to AA+. The ratings agency stated that the move reflects an expected deterioration in fiscal conditions over the next three years, coupled with a substantial and expanding general government debt burden. Fitch highlighted that the U.S. government debt-to-GDP ratio now surpasses by over two-and-a-half times the median levels displayed by other 'AAA' and 'AA' rated countries, indicating heightened vulnerability to potential economic shocks. Moreover, the report noted an "erosion of governance" evidenced by the repeated occurrences of debt limit standoffs.
Manufacturing Activity Contracts Again in July: Business activity in the U.S. manufacturing sector slowed once again in July, according to surveys of executives conducted by the Institute for Supply Management (ISM). The ISM Manufacturing Index recorded 46.4% for the month, up marginally from June but still below the 50% threshold that differentiates expansion of activity from contraction. This marked the ninth consecutive month of contraction after the index had registered a 30-month period of expansion. Conversely, the ISM Services Index registered 52.7% for July, down modestly from June but above 50% for the seventh straight month, signaling continued expansion of business activity in the sector.