This morning’s nonfarm payrolls report wasn’t that much of a shock if anyone read the previously published article about the predicted numbers for today. Granted this author projected growth of 133,000 seasonally adjusted new birth/death model jobs. But the blowout came with an across the board beat of 147,000 and that shocked some of the most economically bearish souls.
If one adds in the higher revisions of 16,000 from April and May and this appears to be a very healthy report on the surface, even if the gains are more reflective of increases in lower wage paying positions.
Once one lifts the hood however to see the underlying data, it’s a bit more disturbing to see what is actually being reported. This statement from the BLS report this morning is probably the most damning non-statistical portion of the report:
In other words, the industries that drive economic growth are not expanding hiring so sustainable incomes for household creation is not occurring. Add in the fact that of the 147,000 jobs created, 112,000 were in state government positions plus health care (includes nursing homes/care). Jeffrey Rosenberg was on Bloomberg Television this morning highlighting the noise in this aspect of the report where he observed 40,000 of the “state government” jobs created were in education in June. His statement that this was probably just a seasonal adjustment, especially since most schools end their school year in June, is an understatement for sure.
Worse the projected private sector job creation appears to be another miss as highlighted above as people look at the headline number but fail to see that the jobs being created are not enough for many people to survive on, thus the little over 500K increase year over year in multiple jobholders. From table A-16 of the report:
If the trend is your friend, this is a very unhealthy trend as it indicates the poor quality of the jobs being created nationwide.
Another disturbing indicator is the relentless increase in people unemployed for over 27 weeks as the stagflationary effects appear to be impairing job creation with another jump higher after a seasonal blip in May.
The BLS statement excerpt below reflects the nature of this problem better than the charts.
While today’s market action can probably be dismissed as amateur hour as the algos and junior traders get to show their mettle during a liquidity thin holiday shortened trading day, reality returns next week when the real economic issues like the trade war hit the tape again.
For the record my scorecard from last night’s projections versus reality in italics:
Non-Farm Payroll: + 133,000 ACTUAL +147,000
U-3 Unemployment rate: Unchanged at 4.2% ACTUAL 4.1%
Average Hourly Earnings: Unchanged at +0.4% ACTUAL 0.3%
U-6 Unemployment rate: Unchanged at 7.8% ACTUAL 7.7% s.a., 8.1% n.s.a
