Job growth totals 114000 in July, much less than expected

The US non-farm payrolls rose by 114,000 in July, below market expectation of 185,000 and the previous value of 179,000. The reading in May got revised lower from 218,000 to 216,000, while reading in June was revised down to 179,000 from 206,000, a decrease of 27,000. The Unemployment Rate edged to 4.3%, higher than expectations, and highest since October 2021. From a sector standpoint, healthcare again led in job creation, adding 55,000 to payrolls. Other notable gainers included construction (25,000), government (17,000), and transportation and warehousing (14,000). Leisure and hospitality, another leading gainer over the past few years, added 23,000. The information services sector posted a loss of 20,000. Average hourly earnings increased by 0.2% MoM.

The sharp slowdown in payrolls in July and rise in the unemployment rate show that the job market has gradually normalized from “overheating”. In terms of the US stock market, the S&P 500 index maintains a stable upward trend, and we expect the S&P 500 index to fluctuate between 5,200 – 5,500 points.

In terms of industry, consumption is less affected by macro economy and shows resilience. Additionally, back to school shopping promotions in late August is expected to further stimulate demand and boost the consumer market.

Tyson Foods (TSN.US)’s sales in 3Q24 amounted to US$13.3bn, up 1.6% YOY, led by Beef, with contributions from Pork and Prepared Foods partially offset by declines in Chicken and International business. Net income reached US$196mn, compared to a net loss of US$417mn in 3Q23.

In terms of segmental businesses, in Prepared Foods, Q3 revenue grew 2.1% YoY, driven by volume growth in Foodservice. Chicken’s revenue in Q3 declined 3.2% YoY, primarily due to lower pricing, while volume was roughly flat YoY. In Beef, revenue was up 5.8% YoY in the quarter primarily due to the volume impact of higher average carcass weights, with pricing increasing 1.4% YoY. Moving to Pork, Q3 revenue increased by a net 10.4% driven by higher price per pound reflecting healthy global demand. The Mgt expected overall sales growth in FY24 to remain flat YoY. Based primarily on the improved outlook for Chicken, Tyson Foods raised the Adjusted Operating Income guidance of between US$1.6 billion and US$1.8 billion. It is recommended to buy at US$60, target at US$69.5, and stop loss at US$57.5.

Coca-Cola (KO.US)’s revenue in 2Q24amounted to US$12.363 billion, up 3% YoY, exceeding market expectations of US$11.75 billion. Operating profit stood at US$2.632 billion, up 10% YoY. Unit case volume grew 2%. Unit case volume in Asia Pacific market increased by 3% YoY. Unit case volume of sparkling soft drinks grew 3%, led by strong performance in Asia Pacific and Latin America. Unit case volume of trademark Coca-Cola grew 2%, driven by growth in Latin America and Asia Pacific. Coca-Cola Zero Sugar grew 6%, driven by growth in all geographic operating segments. Sparkling flavors grew 3%, driven by Asia Pacific. Juice, value-added dairy and plant-based beverages grew 2%, led by North America and Asia Pacific. Water, sports, coffee and tea unit case volume were even.

For 2024, Coke now expects organic revenue growth of 9% to 10%, up from its prior forecast of 8% to 9%. The company also raised its outlook for comparable earnings growth to a range of 5% to 6% from a previous range of 4% to 5%. It is recommended to buy at US$66.5, target at US$77.5, and stop loss at US$64.