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US Jobs Disappoint, Risk of Sept Hike Recedes, Dollar Falls



Underlying concerns about US labor market ease after two robust reports.

Sept Fed views will not change much.

Canada’s data is disappointing, BOC optimism may be challenged.

United States

Nonfarm payrolls

The US grew 151k jobs last month and when coupled with the 20k upward revision to the July figure the net job creation is not far from the 170k-180k median expectation.

U.S. Change in Employment YoY

(see more posts on U.S. Nonfarm Payrolls, )
Year over Year Change in Employment

Year over Year Change in Employment .Click to Enlarge

U.S. Unemployment Rate

The unemployment rate was unchanged at 4.9%.  There had been some hope it would slip to 4.8%.

U.S. Unemployment Rate

(see more posts on U.S. Unemployment Rate, )
U.S. Unemployment Rate

U.S. Unemployment Rate. Click to enlarge - Click to enlarge

U.S. Participation Rate

The participation rate was unchanged at 62.8%.

U.S. Participation Rate

(see more posts on U.S. Participation Rate, )
U.S. Participation Rate

Click to enlarge.

Average Hourly Earnings

However, the details were more disappointing. Average hourly earnings rose 0.1%. The 2.4% year-over-year increase compares with a revised 2.7% (from 2.6%) in July and is the weakest pace since March. Average weekly hours fell to 34.3 from a revised 34.4 hours (initially 24.5 hours). There are roughly 135 mln workers and the full-time equivalent of a tenth of hour swamp the headline increase in terms of output.

U.S. Average Hourly Earnings YoY

(see more posts on U.S. Average Earnings, )
U.S. Average Earning

Click to enlarge.

Separately, the US reported a smaller July trader deficit. The $39.5 bln shortfall in July compares with a $44.7 bln deficit in June. It is the smallest deficit in three months. This is consistent with the shifting composition of growth in the current quarter. Consumption may soften, but investment appears to be increasing. Net exports may be less of a drag.

U.S. Trade Deficit Trade Deficit Ex-Petroleum Petroleum July 2016

The market’s initial reaction is to remove an meaningful chance of a September hike. The dollar has come off across the board. Not only are all the major currencies now higher against the dollar, but so are the emerging market currencies. Gold and oil are also advancing on the back of the weaker dollar. Although ahead of a long holiday weekend in the US, look for liquidity to dry up with the close of London. Immediate potential extends toward $1.1275 and $1.3380 for the euro and sterling respectively. The dollar fell to JPY102.80 but is showing some resilience as it tries to recapture JPY103.

Canada Unemployment Rate

As usual our monthly comparison with the Canadian data.
The Canadian Unemployment remained steady, while the participation.

The data will come out on Monday.

Canada Unemployment Rate

(see more posts on Canada Unemployment Rate, )
Canada Unemployment Rate

Canada Unemployment Rate - click to enlarge. - Click to enlarge


Canada Participation Rate

The Canadian participation is nearly three percent higher than the American one. On the other side, Canadian unemployment is two percent higher.



Canada Participation Rate

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Canada Participation Rate

Canada Participation Rate - Click to enlarge

Italy Participation Rate

Italy has been very much criticized for weak GDP growth. But the Italians are increasing their labor participation rate.

Italy Participation Rate

Italy Participation Rate

Click to enlarge.




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Marc Chandler
He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.
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