The US employment data is an important disappointment, especially coming on the heels of yesterday’s ADP and service ISM reports that had lifted expectations. The private sector created a net 103k jobs, well below the 143k expected and a down from the lower revised 162k created in July. A large part of the miss comes from manufacturing where 10k growth was expected, but instead fell by 15k. This likely reflects some distortions from the auto sector.
Other details are also poor. Hourly earnings were flat. The consensus had expected a 0.2% increase. Yet we already know that Aug auto sales were better than expected and chain store sales were firm. The workweek itself was flat at 34.4 hours after the July week was revised down from 34.5 hours.
The drop in the unemployment rate from 8.3% to 8.1% was a function of people leaving the labor market. The household survey showed a loss of 119k jobs after a 195k loss in July.
Returning to the private sector job gain, the 103k is just below the 3- and 6-month averages of 109k and 112.5k respectively and well below the 164k 12-month. On this basis, there has been no improvement in the labor market.
Separately, we note that the Canadian jobs data was better than expected. The 34.3k increase was about 3-times greater than the consensus expected. However, the gains were all in the part-time work as full-time jobs actually fell by 12.5k.
As the disappointing US jobs data increases the likelihood of a balance sheet response by the Fed next week, and the Draghi-induced euphoria continues, the US dollar has suffered. This is overriding that poor details of the Canadian employment data, pushing the greenback through the CAD0.98 level, CAD is mostly lagging on the crosses.