The July nonfarm payrolls report showed just 73K jobs added, sharply missing the 110K estimate, with major downward revisions to prior months:.
- May was revised down from 144,000 to 19,000—> -125,000
- June was revised down from 147,000 to 14,000 —> -133,000
The unemployment rate ticked up to 4.2% from 4.1% last month.
The sharp revisions led to the dismissal of the BLS Commisioner (‘You’re fired!”) with Trump saying:
The reality is the 818,000-job downward revision was announced by the Bureau of Labor Statistics on August 21, 2024 – not on November 15 right after the election. It reflected a preliminary benchmark adjustment showing that payrolls between March 2023 and March 2024 were overstated by that amount.
August 21…November 15… You can do and say anything when you are the President these days.
Earlier the pink slip was also given on TruthSocial (or announced to the world).
The “major mistake” wasn’t really a mistake but a revision of the data, which happens because of the nuances of the data collection mainly. I spoke to the issues and potential solutions in this post here.
In addition to the US jobs report, the other data was not particularly good. Construction spending was -0.4% versus 0.0% estimate. ISM Manufacturing was lower at 48.0 versus 49.5. Finally, the University of Michigan sentiment dipped to 61.7 from 61.8 preliminary with the 1-year inflation ticking up to 4.5% from 4.4% preliminary but the five year inflation expectations falling to 3.4% from 3.6%.
As if that wasn’t enough, Pres. Trump announced that he was positioning US nuclear submarines in the “appropriate regions”, just in case the foolish inflammatory statements from Russia’s Medvedev are more than just that. Like sending in the National Guard into LA, but on a bigger scale.
All of that – and the start of the August 1 tariffs with Canada set up 35% and Switzerland set up 39% – led to stocks moving lower. The NASDAQ index fell -2.24%. The Russell 2000 also fell more than 2% with a decline of -2.03%.
US yields did move sharply lower as result of the week data with the two-year down -23.7 basis points. The market is for the most part pricing in a September cut, with another one scheduled before year end. The 5-year yield fell and 20.5 basis points in the 10 year fell -14.4 basis points to 4.215%.
The US dollar did move sharply to the downside with the USDJPY down -2.26% (that wsa helped by flight to safety into the JPY). The dollar fell by -1.5% vs the EUR and by 1.00% vs the CHF. Versus the other major currencies:
- CAD -0.49%
- AUD -0.65%
- NZD -0.49%
- GBP -0.55%
Atlanta Fed’s GDPNow tracker was revised lower to 2.1% growth for Q3, adding to signs of a slowing economy.
Feds Waller and Bowman explained their decision for the dissent to lower rates at the FOMC rate decision on Wednesday, and were vindicated by the data today. Fed’s Bostic kept a stiff upper lip regard to his projections for one cut in 2025, but acknowledged that the risks were skewed back toward equality for inflation and employment and that he would have to reevaluate given the new data.
Fed’s Kugler will be stepping down from her position as governor on August 8 which explains her absence “for personal reasons” from the vote on Wednesday. That also gives present Trump the opportunity to appoint a dovish Fed Governor (Hassett perhaps?).
Meanwhile, European and Swiss officials expressed disappointment over U.S. tariff actions, and the White House confirmed Switzerland refused to make progress on trade barriers. Eyes this weekend will turn to Sunday’s expected OPEC+ production guidance.
Rumors had it that they would increase production by 549,000 BPD. Oil prices moved lower by over $2.00 to $67.25.
Thank you for your support. Have a good weekend.
