LIVE MARKETS-Two-fer Tuesday: JOLTS, factory orders

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TWO-FER TUESDAY: JOLTS, FACTORY ORDERS

Investors largely ignored two rather downbeat economic indicators on Tuesday.

Job openings in the United States increased by 2.7% in April to 7.391 million, according to the Labor Department's Job Openings and Labor Turnover Survey (JOLTS) USJOLT=ECI.

The number landed 291,000 shy of consensus.

The JOLTS report, which tracks labor market churn, also showed an uptick in hires and layoffs/discharges.

The quit rate decreased to 2.0% from 2.1% of the labor force. The quit rate is often viewed as a barometer of consumer expectations; workers are unlikely to walk away from a gig in times of economic uncertainty.

"The quits rate declined, underscoring that workers with jobs are more likely to stay put in a labor market with a slow pace of hiring," writes Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "While the Fed is giving more weight to inflation in setting policy, the quits rate is a reminder that wage growth is not a source of inflationary pressures."

Taken together, the April JOLTS report points to a dimming economic outlook in the face of President Trump's market-rattling trade war.

Even so, the report "offers the Federal Reserve enough reassurance that the labor market is stable enough to withstand current monetary policy settings until the central bank has a clearer picture of the impact of trade policy on inflation," Houten adds.

Pivoting to the manufacturing sector, new orders for U.S. factory-made merchandise USFORD=ECI dropped by 3.7% in April, steeper than the 3.1% pullback analysts expected.

The drop reversed March's downwardly revised 3.4% gain.

Factory orders have stalled in the $600 billion range since June 22, and the latest weakening agrees with ISM data released on Monday, which showed the manufacturing sector hovering in contraction territory.

The Commerce Department's report also downwardly revised new orders for core capital goods USNDCG=ECI, showing a 1.5% April decline.

That's bad news, as orders for core capital goods are widely associated with U.S. corporate capex plans.

(Stephen Culp)

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