Friday, July 8, 2016

David Rosenberg and Tylers; "What If I Told You Employment Actually Declined 119,000 In June"

"What if I told you that employment actually declined 119,000 in June and has been faltering now for three months in a row?  Yes, that is indeed the case.

...the focus, as always is on the non-farm payroll report but keep in mind that while this is the data series that moves markets, it does not necessarily have the final word on how the labor market is truly faring.

...Nonfarm payrolls surprised yet again but this time to the upside — surging 287,000 in the best showing since last October and again making a mockery of the consensus economics community which penned in a 180,000 bounce.... when taking May and June together, they average out to be less than 150,000 versus the twelve-month average of 200,000 so even as the June data pulled a major upside surprise, the overall view that the pace of job creation is moderating remains fully intact. is the Household survey that tends to get the story right.

...When the Household survey is put on the same comparable footing as the payroll series (the payroll and population-concept adjusted number), employment fell 119,000 in June — again calling into question the veracity of the actual payroll report — and is down 517,000 through this span. The six-month trend has dipped below the zero-line and this has happened but two other times during this seven-year expansion.

...ignore those pundits who may conclude that a rate hike is back on the table any time soon."

...with stocks at all time highs and bond yields at all time lows, the algos are quite confident that the Fed will not hike for a long, long time. As for the underlying economy, alas that has not mattered for nearly a decade...