Latest job market report:
- Non-farm payrolls unchanged (+0 jobs!)
- Unemployment rate unchanged at 9.1%
And we’re all disappointed. Wait for the headlines: “Economic numbers unchanged” and “Economy going to hell”. Both are true. All told, a nice teaching moment about the importance of expectations.
- Non-farm payrolls unchanged (+0 jobs!)
- Unemployment rate unchanged at 9.1%
And we’re all disappointed. Wait for the headlines: “Economic numbers unchanged” and “Economy going to hell”. Both are true. All told, a nice teaching moment about the importance of expectations.
There are two ways of reading a report like this:
1. How is the economy performing?
Terribly. Over the past three months, average jobs growth of +35k is dismal.
2. What is the news from today’s report?
Forecasters had expected jobs growth of +70k. The failure of these jobs to appear is why markets are falling, and there’s more doom and gloom commentary.
But I think this is a mis-reading. While the establishment survey showed no job growth, the household survey says employment rose +331k. If you put 20% weight on the household survey and 80% weight on the payrolls survey (which is roughly reasonable), this says that true employment growth was roughly consistent with market expectations.
1. How is the economy performing?
Terribly. Over the past three months, average jobs growth of +35k is dismal.
2. What is the news from today’s report?
Forecasters had expected jobs growth of +70k. The failure of these jobs to appear is why markets are falling, and there’s more doom and gloom commentary.
But I think this is a mis-reading. While the establishment survey showed no job growth, the household survey says employment rose +331k. If you put 20% weight on the household survey and 80% weight on the payrolls survey (which is roughly reasonable), this says that true employment growth was roughly consistent with market expectations.
Bottom line: There’s not a lot of news here. The economy is very very weak. Probably not shrinking. And definitely not growing fast enough to reduce unemployment. But we knew that yesterday.
The Fed has been behind the curve on all of this, so it does substantially increase the chances of monetary easing in September.
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