Last Friday the Bureau of Labor Statistics (BLS) published its latest monthly update of The Employment Situation. The results were better than Wall Street expected, sparking a rally in world stock markets that carried over into Monday trading. We’ll see if there’s any further follow through from the US as well, when US trading reopens after Labor Day.
current data According to the establishment survey, the US economy lost 54,000 jobs during the month of August. This breaks out into a gain of 67,000 jobs in the private sector (all of that in the service sector, with healthcare, temporary help and leisure/hospitality the largest gainers); and a loss of 121,000 jobs in the government sector–114,00 of them temporary census workers. So, ex the temporary census jobs, the economy added 60,000 jobs.
revisions The establishment survey data are revised twice, once in each of the two months following the initial report. The overall unemployment figures for June, which had been revised down from -125,000 to -221,000, were revised up to -175,000.
The figures for July, which were initially reported at -131,000, were revised up to -54,000.
225,000 temporary census workers finished their work in June and 143,000 were terminated in July. Ex these workers, the latest revisions show that the US economy added 139,000 jobs during the two months.
together The August revisions added 123,000 jobs to the rolls as reported a month ago. Factor in the 60,000 new jobs reported for August and the economy looks 183,000 jobs better off than it did a month ago.
The S&P 500 gapped upward by about a percent on the open and closed within a half point of the high of the day.
While having an up day (actually three up days in a row) is better than having a loss and though the BLS figures were better than expected, there are several reasons to temper one’s optimism:
1. The rough rule of thumb is that on average 100,000 new job seekers enter the workplace each month. A rate of private sector job growth of 60,000-70,000 a month isn’t enough to absorb all these new workers, to say nothing of addressing the issue of the millions of workers currently unemployed.
2. The rise brought the S&P 500 toward the top of the trading range it has been in since June, but didn’t beak through it.
3. The most senior Wall Street investors were presumably still on vacation last week and will only begin to return to work today.
As a result, I think it will be important to observe trading over the next few days to see whether the August unemployment report has any lasting positive effect.