7 Weak Spots In The Employment Report

david rosenberg

David Rosenberg rains on the bull parade and explains why the

report was more bearish than the market response:

But there were many other parts of the nonfarm report that left much to be desired.  Here’s an unlucky seven examples of softness beneath the surface:

1.  Aggregate hours worked were flat.

2.  All the employment gains were part-time — full-time employment, as per the Household Survey, plunged 254,000.

3.  Those working part-time for “economic reasons” surged 331,000 — the biggest increase in six months.

4. While private payrolls were better than expected, 10,000 of that +67,000 tally reflected returning construction workers who had been on strike.

5. Manufacturing employment was down 27,000 and total goods producing jobs were flat — hardly signs of a robust economic backdrop.

6.  The diffusion index for private payrolls actually fell to 53.0 from 56.7 in July — a seven-month low.  It was 68.0 at the April high, which is consistent with an economy slowing down to stall-speed.

7.  The labour market gap widened with the all-inclusive U6 unemployment rate rising to a four-month high of 16.7% from 16.5% in July.  This is why the odds are stacked against a sustained acceleration in wages.

Source: Gluskin Sheff

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