Economists React to July’s Jobs Report: ‘Not Weak, But…’ – Real Time Economics

U.S. nonfarm employers added 209,000 jobs in July, slightly below forecasts and slower than earlier gains, while the unemployment rate ticked up to 6.2% from June. But employers have now added 200,000 or more jobs in six consecutive months for the first time since 1997.

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Economists were mixed in how they view the report: some have called it “encouraging,” while others consider it “disappointing.”

  • It is a sign of how far the U.S. economy has come in recent months that the 209,000 increase in non-farm payroll employment in July will probably be viewed as a disappointment in the markets. The consensus forecast was as high as 230,000. Admittedly, the unemployment rate also edged up to 6.2% last month, from 6.1%, but that increase was principally because 329,000 people joined the active labor force last month. –Paul Ashworth, Capital Economics
  • The July employment data were not weak, but they did not show the kind of acceleration that would force the Fed leadership to rethink “considerable period” or their preference for a gradual pace of policy normalization. A few other tidbits: The composition of payroll growth was encouraging, with above trend gains in construction and manufacturing and smaller advances in retail, leisure and hospitality, and other service industries (e.g. education). The short-term unemployment rate ticked up from 4.0% to 4.1%, while long-term unemployment rate was steady at 2.0%. –Michelle Girard, RBS Securities
  • The bottom line for employment reports these days is what it means for the Federal Reserve. With wage growth coming in less than expected and the unemployment rate ticking up one tenth, the Fed probably feels comfortable at this time with its stance. That said, one month is not a trend and the trend remains in place; job growth north of 200K is occurring more regularly and wage and inflation pressures should build over time. In that regard, today’s report doesn’t really advance the ball for either side. –Dan Greenhaus, BTIG
  • The July employment report lands just in time to remind the Fed that it may be a bit too quick ramping up inflation risk and dropping out concerns about employment. At least the unemployment rate ticked up for a good reason – more people entering the workforce to look for a job.  A quick read through the establishment data, however, show an automobile-centric jump in manufacturing employment, a likely fault in seasonal adjustments because normal July shutdowns in the industry didn’t occur to the same extent as usual. –Steve Blitz, ITG Investment Research
  • The bottom line is that while the July employment report is decent, at the margin, it is a win for the doves at the Fed, as it suggests that the FOMC is a little less behind the curve than some had feared. I think that the Fed is already falling behind the curve, and today’s data is certainly not dramatic enough to change that. However, I also am quite cognizant of the fact that [Fed Chairwoman] Yellen sees things very differently, and she and her dovish cohorts are going to be very slow to raise rates. I am still comfortable with a mid-2015 liftoff – not because I think that is the right move, but because I believe the current Fed will wait to see the whites of the eyes of inflation. –Stephen Stanley, Pierpont Securities
  • While certainly welcomed improvement, from the Fed’s perspective it’s not just about the headline number, it is about the composition of jobs and whether or not an increase in the quality of employment is translating into wage pressures. In the latest FOMC statement, the Fed was optimistic regarding the recent improvement in the economy, as well as, their expectations for growth going forward. But the biggest impediment to both the recovery and the Fed’s willingness to raise rates remains the “underutilization of labor market resources.” This morning’s employment report – looking beyond the headline number – continues to justify the Fed’s accommodative position. Despite headline employment growth, average hourly earnings remain stagnant, the augmented unemployment rate remains elevated and the participation rate is disappointingly low. –Lindsey Piegza, Sterne Agee
  • Disappointing report.  Payroll job growth remained on a strong trend, rising more than 200,000 for a sixth straight month, but earnings were weak, and the unemployment rate ticked up, though mostly for good reasons. … The mild miss on payrolls growth looked like it may have reflected some timing issues with the end of the school year, with state and local government education payrolls swinging to -1,000 from +25,000 in June and private education services to -8,000 from +12,000.  Otherwise, solid job growth continued to be broadly based across sectors. –Ted Wieseman, Morgan Stanley


Related coverage:

Jobs Report: U.S. Employers Add 209,000 Positions

July’s Employment Report: By The Numbers

Five Takeaways from the July Jobs Report

WSJ’s Hilsenrath: Fed Can Remain Patient on Rate-Hike Debate After Data

Twitter Takes on the Jobs Report



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1 August 2014 | 2:43 pm – Source:

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