This mornings jobs report crushed expectations if you looked at the headline number.The economy added 163,000 jobs in July, beating estimates of 100K new jobs.
But Gluskin Sheff’s David Rosenberg points out that this heady beat aside, the rest of the report was actually pretty weak.
- While 163,000 new jobs was a strong number, it was below 220,000 which is normal at this stage of the business cycle. “When measured against what is normal for an economy supposedly completing a third year of recovery, it is wholly inadequate.”
- The private payroll diffusion index declined for a second straight month, falling to 56.4 per cent in July. This shows that the extent of the advance was weak in July.
- There was no growth in hours worked.
- With only a 0.1 per cent increase in average hourly earnings, work-based income only increased 0.1 per cent showing that in “real terms wages actually contracted in July”. The year-over-year average hourly earnings actually slowed to 1.7 per cent, compared with 2 per cent in June.
- The unemployment rate climbed to 8.3 per cent, while the broader U6 unemployment rate climbed to 15 per cent. “Consider this for a second – one in every seven Americans is either unemployed or underemployed. In this light, it would be most disingenuous to consider this to be a robust report., headline notwithstanding.”
- Moreover, the household survey was disastrous, since it showed that household employment fell 195,000, the first decline in three months. And all the declines were in full-time jobs.
Rosenberg wrote that incomes are slowing at the same time that the savings rate is picking up because of the uncertainty over fiscal policy. All of this is just plain bad for consumer spending.