Economic Risk Factor Update: October 2024 [SlideShare]

While hiring improved in September, the labor market showed signs of potential weakness, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.

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1. Economic Risk Factor Update October 2024

2. Source: Institute for Supply Management, Haver Analytics As of 10/3/2024 ISM Services: Services PMI Composite Index Seasonally adjusted, 50+ = Increasing The Service Sector Risk Level

3. The Service Sector continued Service sector confidence improved notably in September, with the index rising from 51.5 in August to 54.9 in September. This result kept the index in expansionary territory for the month and brought the measure above its starting point for the year. It remains to be seen if the break from the overall downward trend can be sustained. Risk Level

4. Source: Bureau of Labor Statistics, Haver Analytics As of 10/4/2024 All Employees: Total Nonfarm % Change – Year to Year, Seasonally adjusted Private Employment: Annual Change Risk Level

5. Private Employment: Annual Change continued 254,000 jobs were added in September, following an upwardly revised 159,000 jobs in August. This marked 45 consecutive months of job growth, and the unemployment rate ticked down to 4.1% in September. Risk Level

6. Source: Haver Analytics As of 9/30/2024 Spread Between 10-Year U.S. Treasury and 3-Month U.S. Treasury Yield Curve (10-Year Minus 3-Month Treasury Rates) Risk Level

7. Yield Curve (10-Year Minus 3-Month Treasury Rates) continued The yield curve inversion narrowed slightly during the month. The 10-year Treasury yield fell from 3.91% to 3.81%. The 3-month Treasury yield fell from 5.21% in August to 4.73% in September. This marked 24 consecutive months with an inverted 3-month 10-year yield curve. While this doesn’t guarantee that the economy will enter a recession, it’s a widely monitored technical signal that could indicate further slowdowns. Risk Level

8. Source: The Conference Board/Haver Analytics As of 9/24/2024 Conference Board: Consumer Confidence % Change – Year to Year Seasonally adjusted, 1985=100 Consumer Confidence: Annual Change Risk Level

9. Consumer Confidence: Annual Change continued Consumer confidence fell from 105.6 in August to 98.7 in September. Consumer confidence fell 5.37% on a year-over-year basis in September, marking seven consecutive months of declining year-over-year confidence. Given the continued year-over-year decline, we have left this indicator at yellow for now. Risk Level

10. Conclusion : Slower Growth Ahead The September data releases showed a mixed picture compared to August, with some short-term strengths in the context of longer-term declines in economic activity. While hiring improved and the unemployment rate ticked down, the labor market showed signs of potential weakness. Service sector and consumer confidence are worth monitoring going forward. The path of recovery remains uncertain in the short term, and caution is still warranted. Risk Level

11. Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged, and investors cannot invest directly in an index. The information contained herein is provided for informational purposes only and is based upon sources believed to be reliable. No guarantee is made as to the completeness or accuracy of the information. Disclosure