Jobs? Oh My, FED RAISES!
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2022-08-05 09:16 by Karl Denninger
in Employment , 605 references Ignore this thread
Jobs? Oh My, FED RAISES!
[Comments enabled]


Seriously, this one got my attention.....

Total nonfarm payroll employment rose by 528,000 in July, and the unemployment rate edged down to 3.5 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care. Both total nonfarm employment and the unemployment rate have returned to their February 2020 pre-pandemic levels.

Oh, The Fed will stop or even reverse its rate-hikes in the next couple of months!

Uh, no they won't.  Volcker has risen from the dead dudes and dudettes, and he's about to tap-dance on your portfolio if that was your investment thesis.  And do remember, he was a big guy too; his nickname was "Tall Paul" and with good reason.

Health care exploded in employment last month, +70,000.  That's more than double the normal run rate.  We'll leave the "what's up with that" question for the -NAD side, but you all know darn well what it is.  By the way that is, and will continue to be, a very nasty net-negative for the economy.

Construction is above the February 2020 level.  Of course the BLS reports this but what's also obvious is that February is.... winter and July is.... summer.  Sigh...

In addition do note that the population has, of course, increased since February of 2020.  The BLS loves to lipstick the "gains" figures, but never adjusts for population changes.  I do, and when you do the employment situation isn't as nice as they claim.  Nonetheless, gains are gains and there were plenty.

More importantly unlike last month they didn't come from schlubs coming off the couch and then failing to find a job.  Not this time.

And expected migration out of the lower-educational brackets upward occurred this month as does every year, usually in the July report.  Nothing interesting to see there except the large gains one would expect being shifted up in attainment did not happen.  The losses of those moving upward did.  That's...... not so good and might be an extension of what I talked about last time around and alarmed me considerably.  Better hope not, but this shall wait for next month for confirmation because one month is a "yeah, ok", two raises eyebrows and three is a trend.  We're at two.

Hours worked were flat  overall, and this is a very large indicator because one tick (that is, one tenth of an hour) is the equivalent of about 600,000 jobs.  That was neutral this month.

A nasty figure is in the average earnings numbers.  Hourly earnings went from $30.67 -> 32.27 over the last year, which is a 5.2% increase.  That is well below the rate of inflation, which sounds not-so-good.

The truth is much worse as the weekly earnings, which is what matters as it captures the hours worked and size of the actual paychecks, went from $1,067.32 -> $1,116.54.  That's less than 5%.

People like to say the "service providing people" got bigger raises.  Balderdash when it comes to inflation; the leisure and hospitality category, which is the bottom of the line in those statistics, were up 5.8% in actual pay terms, not in hourly terms.  Don't wave that 8.7% hourly wage number around in my face what matters is the total size of the check and if you cut hours in response to higher hourly wages, which is exactly what is happening, the wage-earner still gets screwed.

The TNX sits at +5.3% on the day as I write this.

Rates are going higher, and not a little either.

Like it or not.