I am still on vacation here through Monday but the jobs number in the US was so ugly I had to comment briefly. The unemployment rate came in at 7.6% and 88,000 jobs were added to non-farm payrolls. The consensus estimates were for 7.7% unemployment and +192,000 jobs. So this is a bad report.
I haven’t parsed the data and probably won’t for some time so I am going to give you my view based on the headline numbers and given what I have written regarding the last two reports.
First, while net revisions of +61,000 added to the headline +88,000 number to get you to +149,000 on non-farm payrolls, this is still well short of consensus estimates. The key data point here was the labor participation rate as the 7.6% unemployment rate was apparently due to 500,000 dropping out of the labor force. The 63.6% labor participation rate is the lowest since 1979 in the US. And given the ugly Canada jobs data – loss of 54,500 jobs and a tick up of unemployment from 7.0% to 7.2% – it tells you that North America is not doing that well on the jobs front. Expect quantitative easing to continue and expect rates to remain near zero percent in the US. A rate cut could happen in Canada.
For Credit Writedowns Pro subscribers, after the jump are the key highlights on my thinking from the last two jobs reports in the US. I want to capture them here and say how this report changes the thinking, if at all.
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