The jobs data disappointed. Nonfarm payrolls increased by 22,000 versus expectations of a 75k increase. Revisions in the data indicate that employment shrank in June for the first time since 2020.
Accounting for the revisions in this report, employment growth in the last three months has averaged 29,000. Payrolls growth has come under 100,000 for four straight months, The weakest stretch of job growth since the pandemic
Will this data be further revised? The BLS says the collection rate for August was 56.7%, the lowest for that month since 2000. The rate typically rises above 90% in subsequent months as surveys are returned.
The jobless rate met forecasts, rising to 4.3% from the month prior level of 4.2%, the highest level since 2021.
The data all but cement an interest rate reduction at the September FOMC meeting and almost assures another 25-bps reduction by year’s end. The market is suggesting a total of 142 bps pf easing in the next 12 months.
It must be noted that job creation has slowed. It has not contracted for the exception of June. The labor market can be perhaps described as a “low hiring, low firing environment.”
Other notable aspects of the labor report is that the labor participation rate (LPR) nominally rose and the LPR for the ages of 25 and 54, known as prime age workers, increased to the highest in nearly a year…a positive sign. Wages also rose by 3.7%
Considerable attention was previously focused on the firing of federal workers. Many had estimated over 500,000 jobs will be lost by September. Federal employment fell by 15,000 in August and the data indicates only 97,000 federal workers have been fired or have quit since peaking in January. This is almost statistically insignificant for a 2.93-million-person workforce.
As indicated, the Treasury market rallied on the data with the two-year Treasury or the instrument most sensitive to monetary policy, fell to the lowest yield in five months. The yield curve steepened moderately.
How will this week’s inflation data influence the outlook for monetary policy?
Equities were moderately lower perhaps on a combination of profit taking and from fears the economy might be slowing too quickly.
The economic calendar is comprised of several inflation statistics including the PPI and CPI, inventory data and a sentiment survey.
Last night the foreign markets were up. London was up 0.06%, Paris up 0.45% and Frankfurt up 0.46%. China was up 0.38%, Japan up 1.45% and Hang Seng up 0.85%.
Futures are nominally higher ahead of this week’s inflation data. The 10-year is up 1/32 to yield 4.08%.
