- 130,000 jobs added for month of August
- private payrolls add 96,000
- median estimate 150,000
The United States released its monthly job report on Friday, announcing an addition of 130,000 jobs for the month of August. This was slightly lower than anticipated, as the median consensus by most analysts around the world expected a gain of 150,000. Beyond that, the previous couple of months were guided lower as revisions came out. All things being equal, there are a couple of things to pay attention to.
Digging through the numbers
Digging through the numbers shows quite a bit of stability, even though we did miss for the month of August. The average monthly jobs gain number at this time of the year is 150,000, which is considerably lower than the 223,000 level in 2018. At this point, we have had enough hiring to keep the labor force in line with population growth. The United States is currently at extreme lows that have not been seen since the 1960s.
The private payrolls rose by 96,000, which is a three-month low. This is quite concerning, especially when you take into account that 25,000 temporary government workers were added for the 2020 consensus. That does mean jobs will disappear in a few months, so they can only be taken with a grain of salt. However, there were some silver linings. For example, there was a rebound in the workweek length, and at least a halt in the falling of income growth. This helps the idea of workers spending more money, which is a major driver of the US economy.
The participation rate of the working-age people in the labor force has increased to 63.2%, which is a healthy sign for the US economy as well. Ultimately, with baby boomers retiring, it makes sense that the labor force is starting to shrink a little, while at the same time we are starting to see a demand for hiring at relatively all-time highs.
Reaction in the market
The reaction in the market was that the equity markets rose, albeit somewhat slowly. We continue to see a lot of bullish pressure and risk appetite, although we are reaching fairly high levels. The 3000 levels in the S&P 500 will attract a lot of attention, but the recent breakout of consolidation measures for a move to 3100. As long as the job numbers continue to look relatively healthy, there’s no reason to believe that the S&P 500 won’t reach that level, given enough time.
Precious metals took a hit as they are probably exhausted at this point. After going straight up for several weeks, it’s perhaps time that they pulled back to offer a value proposition for those who have missed out. All things being equal, it looks as if a “steady as she goes” type of market is starting to present itself for traders in the month of September.