Stocks and Mortgage Bonds are both slightly higher after the release of the highly anticipated BLS Jobs Report.
BLS Jobs Report
The Bureau of Labor Statistics (BLS) reported that there were 142,000 jobs created in August, which was below estimates of 160,000. There were also 86,000 in negative revisions to the previous two months - Last month’s reading of 114,000 was revised lower by 25,000 to 89,000 and May was revised lower from 206,000 originally to 179,000 last month to 118,000 in today’s report. That’s a total negative revision of 88,000 over the last two months for June.
So far this year the BLS has revised their original numbers down by a total of 365,000…and we only have data on the revisions fully through June and one revision for July. That means that 20% of the jobs just this year originally reported never happened. Clearly, they are still having a problem, and are on track for over 700,000 in negative revisions.
The faulty Birth/Death model added 100,000 jobs to the headline figure, which doesn’t make sense because small business shed jobs within ADP.
Average hourly earnings, which measures wage pressured inflation, rose 0.4%, which was hotter than estimates of 0.3%. Year over year, average hourly earnings rose from 3.6% to 3.8%, which was above estimates of 3.7%.
Average weekly hours worked increased from 34.2 to 34.3. Average weekly earnings rose 0.7%, with the year over year figure increasing from 3.3% to 3.5% year over year.
Remember, there are two surveys within the Jobs report, the Business Survey and the Household Survey. The Business Survey is where the headline job creation number comes from the and the Household Survey is where the unemployment rate comes from.
The Household Survey has its own job creation component, and it showed 168,000 job gains. Additionally, the labor force increased 120,000, but since there were more jobs created than increase in the labor force, the unemployment rate fell from 4.3% to 4.2%. Looking deeper, we lost 438,000 full-time jobs and gained 527,000 part-time jobs, which is very weak. That means that the unemployment rate went down because people are working part-time because they could not find full-time work, and it counts them.
But the u-6 unemployment rate accounts for this and counts those people who would have rather worked full time, but could only find part time work as unemployed, and that rose from 7.8% to 7.9%, the highest level since October 2021.
News Next Week
Wednesday: Mortgage Apps, Consumer Price Index, 10-year Note Auction
Thursday: Producer Price Index, Initial Jobless Claims, 30-year Bond Auction
Technical Analysis
Mortgage Bonds are testing overhead resistance at 101.18 once again, attempting to break above it. If Bonds are turned lower, we have to be on guard and cautious as we have seen a nice rally in Bonds. The 10-year tested support at 3.66%, but that was short lived and it moved back up to 3.73%.
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