us jobs

By James Politi in Washington

Capping a week flooded with US economic data, July’s job figures are out. So, what did we learn this time around?


1) A mixed bag but the jobs report could favour a later taper

Federal Reserve officials hoping that the July jobs report would provide a decisive answer to their dilemma over when to start tapering the asset purchases are likely to have been sorely disappointed.
The data were a classic mixed bag – with the unemployment rate dropping 0.2 percentage points from 7.6 per cent to 7.4 per cent but payroll growth slowed, running below expectations.
But on the margins, the data are likely to offer proponents of a later taper just a bit more ammunition than supporters of an early taper. The Fed is likely to give more weight to the weaker payrolls “establishment” survey than the stronger but more volatile household survey, which measures joblessness.
The question for fans of slowing down asset purchases at the FOMC’s next meeting on September 17-18 is whether a slight slowing in job creation is sufficient to deter them, and it may not be. And luckily for FOMC members, they still have more than six weeks of data – including another jobs report – to make up their minds. Read more

Simone Baribeau

I posted last night about the recent large revisions to the headline US jobs loss number. Today the BLS released its annual benchmark revision (which are separate from the monthly revisions that take place for the two months following the initial estimate). No surprise, the difference between the preliminary and final revision is huge. And very negative.

“The level of payrolls now reported for December is a stunning 1363K below what had been reported last month,” wrote Joshua Shapiro, Chief US Economist at MFR. “The main reason that payrolls were overstated by so much was in all likelihood the ‘birth/death adjustment,’ which is the methodology used to capture the effect of new small business formation. In the current economic and financial environment, this statistical adjustment is overstating the vibrancy of new business formation, particularly with small businesses finding bank credit very difficult to come by.” Read more