Unemployment Report, July 2012

TRADEX GLOBAL INTERNAL COMMENTARY

Nonfarm payrolls rose more than expected in July, an increase of 163k.  The average gain in the 2nd quarter was 73k and consensus was an increase of 100k, so the number was a very positive surprise.  Other parts of the report were not as positive, with the unemployment rate rising to 8.3%, flat work weeks and minimal wage gains.  As you can see, although the number of jobs added was strong, overall the report was mixed.  In this “good is bad” and “bad is good” environment, the report is not likely to change the view that the economy is weak, growth is slow and joblessness remains stubbornly high. Keep looking towards the September FOMC meeting for potential QE3 action… – Richard Travia

EXTERNAL RESEARCH COMMENTARY

Payrolls in the U.S. climbed more than forecast in July, boosted by a pickup in employment at automakers, even as the jobless rate unexpectedly rose to a five-month high. The increase of 163,000 followed a revised 64,000 gain in June payrolls that was less than initially reported, Labor Department figures showed today in Washington. The median estimate of 89 economists surveyed by Bloomberg News called for a gain of 100,000. Unemployment rose to 8.3 percent. Uneven hiring may hold back consumer spending, the biggest part of the economy, as a global slowdown and impending U.S. tax changes weigh on businesses. Job cuts at companies from Morgan Stanley (MS) to Cisco Systems (CSCO) Inc. mean unemployment may remain elevated, one reason the Federal Reserve this week said it is prepared to take new steps if needed to boost growth. “It’s good to see hiring pick up a little bit,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “Some of the details don’t make it an unequivocally good report. The labor market is expanding but at a slower pace. The Fed is still very much in play for the September meeting.” Stock-index futures extended gains after the figures, with the contract on the Standard & Poor’s 500 Index rising 1.1 percent to 1,376.5 at 8:52 a.m. in New York. Estimates in the Bloomberg survey ranged from increases of 50,000 to 165,000 after a previously reported 80,000 gain in June. Revisions to prior reports subtracted a total of 6,000 jobs to payrolls in the previous two months.

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