Overview of August 2 U.S. jobs report

The U.S. July jobs report seems to have been favourably viewed by the financial markets. However, at least the following things need to be factored into any reasoned view with respect to it:

• the reported unemployment rate increased fractionally to 8.3%. This is not good, and not likely good for President Obama in the context of this year’s November 6 Presidential election;
• June’s previously released private payroll numbers were very poor, and have now been adjusted downward by 11,000 jobs. This shows the variability of reported statistics, and focuses on their reliability. Manufacturing jobs previously were ‘officially reported’ for June to have increased by 14,000. 11,000 is 79% of 14,000 – hardly insignificant in the context of ‘reported statistics viability’;
• hourly earnings were reported as lower than expected. This is important because of the significance (generally thought to be about 70% of U.S. GDP) of U.S. consumer spending. One can’t spend what one doesn’t have;
• growth in temporary jobs is stronger than growth in permanent jobs. This is important because it is only meaningful long-term permanent jobs that are will signal ‘real U.S. economic recovery’;
• the July manufacturing jobs increase reported was, by one estimate, about 50% higher than it would have been due to seasonal deviations that may be reported (and reversed) in August; and,
• at least one other survey, the U.S. government ‘Household Employment Survey’ showed a loss of jobs in July of 195,000 – a number wildly different than the job gains number of 163,000 reported in the ‘official’ U.S. jobs report.

Don’t hold your breath on U.S. jobs recovery. The financial markets seemingly, in this instance at least, responded to what ‘they wanted to hear’. Topical Reference: July’s jobs report is probably not as good as it seems, from Also Sprach Analyst, Walter Kurtz, August 4, 2012 – reading time 3 minutes; and June jobs report: Hiring weak, unemployment unchanged, from CNN Money, Annalyn Censky, July 6, 2012 – reading time 3 minutes. Brief Commentaries prompted by world headlines Financial Markets: The financial markets short-term view In yet another example of either incorrect reporting, or of financial markets overreaction, some media reports last Friday attributed ‘price jumps’ in the:

• Italian and Spanish stock markets that day to the Spanish Prime Minister’s further suggestion yesterday that he may request a ‘full bail-out’ to shore up Spain’s flagging finances; and,
• the Dow Jones Industrial Average to Friday’s U.S. jobs report.

The explanations for up-ticks in market prices Friday hardly seem credible to me. Once again, for the record I typically place no weight or reliance on minute/minute, hour/hour, or day/day changes in financial markets indexes as a measure of anything. The article referenced in this commentary was, as at 7:00 a.m. Eastern time on Saturday, the ‘most viewed’ on the website of its publisher. Topical Reference: New hopes on debt crisis boost markets, from The Telegraph, Philip Aldrick and Richard Blackden, August 3, 2012 – reading time 2 minutes. World >> Economy: Continuation of global slowdown? At the end of last week Purchasing Managers Indexes were announced for many countries, including France, Germany, Italy, Japan, the United Kingdom, and the United States. Broadly speaking, those indexes all dropped, suggesting momentum may be building toward continuing global slowdown. This is extremely important if it global slowdown persists, as without GDP growth – and in the long-term real growth as country populations continue to grow and National Debts in developed countries continue to rise – one would think that country economies that are over-levered (that is, are carrying too much debt and are continuing to run deficits) have to deteriorate further. Four articles are included with this commentary. If you participate in the financial markets in any way I suggest you read as many of them as you can stomach – unless of course you are already adequately informed through other media sources. Topical References: World-Wide Factory Activity, by Country, from Real Time Economics, The Wall Street Journal, August 1, 2012 – reading time 2 minutes; PMI reports point to slowing global growth, from The Globe and Mail, Scott Barlow, August 1, 2012 – reading time 2 minutes; Downturn ‘entrenched’ in Germany amid poor eurozone PMI, from The Telegraph, August 3, 2012 – reading time 2 minutes; and, Falling Demand Spreads World-Wide Factory Flu, from Real Time Economics, The Wall Street Journal, Kathleen Midigan, August 2, 2012 – reading time 2 minutes. Snippets From Today’s Brief Commentaries Snippet #1: June’s previously released U.S. private payroll numbers were very poor, and have now been adjusted downward by 11,000 jobs. This shows the variability of reported statistics, and focuses on their reliability. Manufacturing jobs previously were ‘officially reported’ for June to have increased by 14,000. 11,000 is 79% of 14,000 – hardly insignificant in the context of ‘reported statistics viability’. Snippet #2: For the record I typically place no weight or reliance on minute/minute, hour/hour, or day/day changes in financial markets indexes as a measure of anything. Snippet #3: At the end of last week Purchasing Managers Indexes were announced for many countries, including France, Germany, Italy, Japan, the United Kingdom, and the United States. Broadly speaking, those indexes all dropped, suggesting momentum may be building toward continuing global slowdown.