The Bureau of Labor Statistics has released the July Employment Situation Report (after a 30 minute delay).
Total nonfarm payroll employment increased by 117,000 in July, following little growth over the prior 2 months. Total private employment rose by 154,000 over the month, reflecting job gains in several major industries, including health care, retail trade, manufacturing, and mining. Government employment continued to decline. The unemployment rate was little changed at 9.1 percent.
Reuters Quick Recap...
RTRS- U.S. JULY NONFARM PAYROLLS +117,000 (CONSENSUS +85,000) VS JUNE +46,000 (PREV +18,000), MAY +53,000 (PREV +25,000)
RTRS- US JULY PRIVATE SECTOR JOBS +154,000 (CONS +115,000), JUNE +80,000 (PREV +57,000)
RTRS- U.S. JULY JOBLESS RATE 9.1 PCT (CONSENSUS 9.2 PCT) VS JUNE UNREVISED AT 9.2 PCT
RTRS- U.S. JULY AVERAGE HOURLY EARNINGS ALL PRIVATE WORKERS +0.4 PCT (CONS +0.2 PCT) VS JUNE UNCHANGED, TO $23.13 VS JUNE $23.03; JULY YEAR-ON-YEAR EARNINGS +2.3 PCT
RTRS- U.S. JULY AVERAGE WORKWK ALL PRIVATE WORKERS 34.3 HRS (CONS 34.3 PCT) VS JUNE UNREVISED AT 34.3 HRS, FACTORY 40.3 VS 40.3, OVERTIME 3.1 VS 3.1
RTRS- U.S. JULY AGGREGATE WEEKLY HOURS INDEX FOR ALL PRIVATE WORKERS +0.1 PCT VS JUNE -0.2 PCT
Excerpts from the Release...
Health care employment grew by 31,000. Retail trade added 26,000 jobs. Manufacturing employment increased by 24,000. Employment in mining rose by 9,000. Professional and technical services continued to trend up in with 18,000 jobs added in July. Employment in construction, transportation and warehousing,information, financial activities, and leisure and hospitality changed little over the month. Government employment continued to trend down over the month (-37,000). Employment in state government decreased by 23,000, almost entirely due to a partial shutdown of the Minnesota state government.
The number of long-term unemployed (those jobless for 27 weeks and over), at 6.2 million, changed little over the month and accounted for 44.4 percent of the unemployed.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was about unchanged in July at 8.4 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. In July, 2.8 million persons were marginally attached to the labor force, little changed from a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, there were 1.1 million discouraged workers in July, about the same as a year earlier. (These data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.7 million persons marginally attached to the labor force in July had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.
Plain and Simple: Overall this report tells us the economy is not in freefall, but also serves as a reminder that we're in for a long, slow recovery. The headline payroll print beat concensus expectations and revisions to May and June data added 56,000 jobs to the 2011 total, which now sits at 930,000. The unemployment rate was unchanged at 9.1%; economists were expecting a small rise to 9.2%. On the surface that sounds like a positive but it's purely a factor of how the BLS defines "unemployed" and "employed". When including folks marginally attached to the labor force the unemployment rate is really 16.1% (FULL EXPLANATION). The average workweek for all employees on private nonfarm payrolls was unchanged over the month at 34.3 hours but average hourly earnings did increase by 10 cents (0.4 percent) to $23.13. That's a positive and likely a factor of the rising cost of living and high levels of productivity (cost-push inflation = good thing if employers boost hourly wages). The worst part of this report continues to be the number of Americans who've been unemployed for longer than 27 weeks: 6.2 million! That's 44.4% of the unemployed. This is the "lost generation" we keep referring to in our commentaries and we don't think there's much Ben Bernanke or Barack Obama can do to help these people. Investments in technology (automation) and advances in productivity have stolen jobs from millions of low-skilled laborers. It's all about education and the ability to adapt in this job market.
Market Reaction...
CHOPPY and generally NOT FRIENDLY to any major market but Gold and Silver.
Stock futures initially rallied on the news but failed to break through our long-term pivot at 1220. S&Ps are currently -9.50 at 1189.25. (-0.77%), teetering on their 50% retrace line of all time highs.
The dollar index is down -0.69% at 74.834.
Oil is -0.52% at $86.18
Gold is +1.04%
Silver is +1.87%
The 10yr note is -19/32 at 105-20 yielding 2.471% (+6.4bps). All things considered, that isn't so bad. 10s are still under 2.50%.
The 2s/10s curve is 4bps steeper at 218bps. Again, not
The FNCL 4.0 MBS coupon is -19/32 at 102-29. Yields spreads are gapping out but off their session wides. We've haven't totally erased yesterday's rally yet but we're only 1/32 away from doing so. If TBAs are going to bounce, now would be a great time.
LOAN PRICING IS WORSE
And now I have a rumor to share...
I'm hearing some chatter that S&P is planning to lower the U.S. credit rating after markets close. At the moment these rumors are toally unsubstantiated, all hearsay. It could be bunk.