Employment Situation, August 2016

This morning at 8:30 edt the Bureau of Labor Statistics of the Labor Department released its monthly Employment Situation.  This was a so-so report.

The economy added +151,000 new jobs last month.  Revisions to the prior two months were -1,000, or insignificant.  Wages were up, but only slightly, maintaining their growth of about 2.4% annually.  Service industries continued to gain; manufacturing and construction were flattish.

The results did fall short of Wall Street economists’ estimates of a +181,000 advance, but to my mind this says more about the economists and the difficulty of forecasting the jobs figure precisely than it does about the jobs.

It there’s one thing I take from it, it’s that the period of turbocharged jobs gains–well over +200,000 a month–we were experiencing earlier in the year is now behind us.  If I were forced to attribute this relative slowdown to anything, it would be the strength of the dollar.

For me, the most curious thing about the report is that it appears to have sparked a rally on Wall Street, on the notion that this report makes it less likely that the Fed will raise interest rates later this month.  This makes little sense to me, although I’ll take an up day rather than a down one any time.  Personally, I think the Fed risks accusations of trying to influence the election if it acts before November, so not matter what its rhetoric it’s unlikely to move now.  Looking at the character of gaining stocks, it’s primarily smaller doing better than larger, something that mostly happens when rates are rising.

This is the first time in a long while I’ve been nonplussed by market movements.

 

One response

  1. I don’t understand why a small increase by the Federal Reserve would be seen as being political – which party would complain and on what basis? The Federal Reserve is already a political issue.

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