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The US Labor Department August jobs report on Friday came in lower than expected at 130k v 165,000 NFP jobs added. In August the US added 3,000 manufacturing jobs . Unemployment stayed at 3.7% just off the lowest since December 1969. Private payrolls added 96,000 new jobs.

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August 2019 U.S. Employment Report

The Fed Chair Powell came out with a more dovish tone as expected at the last FOMC following market fatigue from the trade wars and the resultant uncertainty. There has been an ongoing campaign by US Presdent Trump calling for lower rates and criticising the Federal Reserve for raising in the past year.  Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. In February American wages hit their highest levels in a decade at 3.4%, but has fallen back to 3.2% in August.

The market expected the August report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of  164,000 new jobs, it came in right lower at 130,000. Logic suggests a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Unemployment is near a 49 year low with higher participation and the two month NFP revision was -20,000 change to jobs last month.

However, the combination of weaker PMI readings and skill shortages amid a low unemployment rate of 3.7% pose downside risks. More important could be the earnings data, which missed expectations in April and May. Any further cooling of pay growth would raise the odds of the FOMC’s next policy change being a rate cut.

US Jobs Aug 2018 

Employment:

  • Non-farm payrolls +130k vs +164K expected, Prior 159K (revised from 164K)
  • Unemployment rate 3.7% vs 3.7% expected/prior
  • Participation rate 63.2% vs 63.0% expected.prior (63.2% highest since 2014)
  • Underemployment rate 7.2% vs 7.0 % prior
  • Two month net revision -20k vs Prior -41K
  • Manufacturing payrolls +3k vs +16k Prior ( April was first loss since Oct 2016)
  • Private payrolls +96k vs 148K Prior, expected

Wages:

  • Average hourly earnings +0.4% m/m v +0.2%/+0.3% m/m Prior/Expected
  • Average hourly earnings +3.2% y/y vs 3.2% exp, Prior 3.3% y/y
  • Average weekly hours 34.4 v 34.4 exp  Prior 34.3

July 2019 U.S. Employment Report

US Jobs July 2019

Employment:

  • Non-farm payrolls +164k vs +164K expected, Prior 193K (revised from 224K)
  • Unemployment rate 3.7% vs 3.7% expected/prior
  • Participation rate 63% vs 62.9% expected.prior (63.2% highest since 2014)
  • Underemployment rate 7.0% vs 7.2 % prior
  • Two month net revision -41k vs Prior -11K
  • Manufacturing payrolls +16k vs +17k Prior ( April was first loss since Oct 2016)
  • Private payrolls +148k vs 191K Prior, expected

Wages:

  • Average hourly earnings +0.3% m/m v +0.2%/+0.3% m/m Prior/Expected
  • Average hourly earnings +3.2% y/y vs 3.2% exp, Prior 3.1% y/y
  • Average weekly hours 34.3 v 34.4  Prior 

US Jobs July 2019 Earnings by Industry

Household Survey Data

The unemployment rate held at 3.7 percent in July, and the number of unemployed persons was little changed at 6.1 million.

Among the major worker groups, the unemployment rate for Asians increased to 2.8 percent in July. The jobless rates for adult men (3.4 percent), adult women (3.4 percent), teenagers (12.8 percent),  Whites (3.3 percent), Blacks (6.0 percent), and Hispanics (4.5 percent) showed little or no change over the month.

In July, the number of persons unemployed less than 5 weeks increased by 240,000 to 2.2 million, while the number of long-term unemployed (those jobless for 27 weeks or more) declined by 248,000 to 1.2 million. The long-term unemployed accounted for 19.2 percent of the unemployed.

In July, the labor force participation rate was 63.0 percent, and the employment-population ratio was 60.7 percent. Both measures were little changed over the month and over the year.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 363,000 in July to 4.0 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. Over the past 12 months, the number of involuntary part-time workers has declined by 604,000.

In July, 1.5 million persons were marginally attached to the labor force, essentially unchanged from a year earlier. (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 368,000 discouraged workers in July, down by 144,000 from a year earlier. (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 1.1 million persons marginally attached to the labor force in July had not searched for work for reasons such as school attendance or family responsibilities.

US Jobs JUly 2019 Industry

Establishment Survey Data

Total nonfarm payroll employment increased by 164,000 in July, in line with average employment growth in the first 6 months of the year. In 2018, employment gains had averaged 223,000 per month. In July, notable job gains occurred in professional and technical services (+31,000), health care (+30,000), social assistance (+20,000), and financial activities (+18,000).

Professional and technical services added 31,000 jobs in July, bringing the 12-month job gain to 300,000. In July, employment increased by 11,000 in computer systems design and related services; this industry accounted for about one-third of employment growth in professional and technical services both over the month and over the year. Employment in health care rose by 30,000 over the month, reflecting a gain in ambulatory health care services (+29,000).

Health care employment has increased by 405,000 over the year, with ambulatory health care services accounting for about two-thirds of the gain. Social assistance added 20,000 jobs in July. Employment in this industry has increased by 143,000 over the year

In July, financial activities employment rose by 18,000, with most of the gain occurring in insurance carriers and related activities (+11,000). Mining employment declined by 5,000 in July, after showing little net change in recent months. Manufacturing employment changed little in July (+16,000) and thus far in 2019. Job gains in the industry had averaged 22,000 per month in 2018.

Employment in other major industries, including construction, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government, changed little over the month. In July, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $27.98, following an 8-cent gain in June.

Over the past 12 months, average hourly earnings have increased by 3.2 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees rose by 4 cents to $23.46. (See tables B-3 and B-8.) The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.3 hours in July. In manufacturing, the average workweek decreased by 0.3 hour to 40.4 hours, and overtime declined by 0.2 hour to 3.2 hours. The average workweek of private-sector production and nonsupervisory employees declined by 0.1 hour to 33.5 hours.

The change in total nonfarm payroll employment for May was revised down by 10,000 from +72,000 to +62,000, and the change for June was revised down by 31,000 from +224,000 to +193,000. With these revisions, employment gains in May and June combined were 41,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the 

The Employment Situation for August is scheduled to be released on Friday, September 6, 2019, at 8:30 a.m. (EDT)

Other US July Employment Component Releases

US July ADP Job Report

  • ADP July US employment +156K vs +150K expected
  • Prior was +102K (revised to +112K)
  • Service-providing +146K
  • Goods producing +9K 

 ADP July 2019

US Q2 employment cost index

  • US Q2 employment cost index +0.6% vs +0.7% expected, Prior +0.7%
  • Benefit costs +0.5%
  • Wages/salaries +0.7%
  • Private sector wages up 3.0% y/y vs 3.0% prior
  • This is the smallest cost in 18 months

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The Employment Cost Index in the United States averaged 0.83 percent from 1982 until 2019, reaching an all time high of 2 percent in the third quarter of 1982 and a record low of 0.20 percent in the second quarter of 2015.

US July Challenger Job Cuts

Released by Challenger, Gray, and Christmas Inc -1 August 2019

  • US July Challenger job cuts +43.2% vs +12.8% prior 
  • Layoffs 38.85k Prior 41.98k.

The pace of downsizing slowed in July, as U.S.-based employers announced plans to cut 38,845 jobs from their payrolls, down 7.5% from the 41,977 cuts announced in June, according to the latest report on job cuts released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.

July marks the second consecutive drop in monthly job cut announcements since May, and is the lowest total since August of last year, when 38,472 job cuts were announced. Despite the drop, July’s total is 43.2% higher than the 27,122 job cuts announced in the same month last year. So far this year, employers have announced plans to cut 369,832 jobs, a 35.8% increase from the 272,301 cuts announced in the first seven months of last year. It is the highest seven-month total since 2015, when 393,368 cuts were announced.

“The US is enjoying the longest economic expansion in American history and the June jobs report documented a decidedly strong labor market. However, slowing GDP growth in the second quarter, cuts in business investment, and trade tensions led the Federal Reserve to cut its key interest rate by a quarter-point. This move signals trouble on the horizon for the current economic cycle," said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.

"Employment tends to be a lagging indicator, as companies often keep hiring up to the edge of a recession. Right now, the labor market is strong. Employees can continue to anticipate moderate wage growth and advantageous employment prospects for the time being," he added.

Transportation led all sectors in July, with 5,532 announced cuts, followed by Industrial Goods Manufacturing, which announced 4,403 cuts last month. The Energy sector announced 3,737 job cuts in July, while Pharmaceutical companies announced 3,062.

“Manufacturers are being hit, not only by shifting consumer behavior and automation, but by the imposed tariffs. Last month saw over 1,000 cuts announced due to the impact of tariffs,” said Challenger. In fact, 1,053 cuts were announced due to tariffs, for a total of 1,430 this year.

Retail continues to lead all sectors in 2019 with 55,167 cuts, 1,919 of which occurred last month. That is 27.2% fewer cuts than the 75,763 announced in the same period last year.

Companies in the Industrial Goods sector have announced 52,054 cuts, 529% higher than the 8,276 announced in the first seven months of last year. Meanwhile, Automakers and suppliers announced plans to cut 34,379 jobs through July, up 194% from the 11,696 cuts announced through July of 2018.

Companies in the Technology sector announced 23,281 job cuts through July, up 187% from the 8,124 cuts announced in the same period last year. Energy sector job cuts are up 259% over last year, with 18,264 cuts so far this year compared to 5,088 announced through July 2018.

While job cuts are up in every region, companies located in the Southern United States have seen the largest jump in job cut announcements, as employers in this region have announced 51% more job cuts than through the same period last year: 77,923 compared to 51,497 in 2018. Companies in the Eastern United States had the second-largest percentage increase with 39.9%, as employers in this region announced 108,806 cuts in 2019 compared to 77,795 last year (Table 3).

Note: Challenger has updated the names of two industries to better describe the companies that are tracked therein. “Computer” will now be labeled “Technology” and “Commodities” will now be called “Mining.” Challenger is also breaking out Financial Tech firms, which will be referred to as “FinTech.” These changes are represented in Table 2 (Job Cuts by Industry) and Table 7 (Announced Hiring Plans).

US Weekly Jobless Claims week ending July 27 2019

  • In the week ending July 27, the advance figure for seasonally adjusted initial claims was 215,000, an increase of 8,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 206,000 to 207,000.
  • The 4-week moving average was 211,500, a decrease of 1,750 from the previous week's revised average. The previous week's average was revised up by 250 from 213,000 to 213,250.
  • The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending July 20, unchanged from the previous week's unrevised rate.
  • The advance number for seasonally adjusted insured unemployment during the week ending July 20 was 1,699,000, an increase of 22,000 from the previous week's revised level. The previous week's level was revised up 1,000 from 1,676,000 to 1,677,000.
  • The 4-week moving average was 1,698,250, an increase of 750 from the previous week's revised average. The previous week's average was revised up by 250 from 1,697,250 to 1,697,500

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The highest insured unemployment rates in the week ending July 13 were in Puerto Rico (2.5), New Jersey (2.4), Connecticut (2.2), Pennsylvania (2.0), Rhode Island (1.9), California (1.8), Alaska (1.7), Illinois (1.6), Massachusetts (1.6), New York (1.4), Oregon (1.4), and West Virginia (1.4).

The largest increases in initial claims for the week ending July 20 were in Michigan (+1,490), Illinois (+737), California (+280), and Nebraska (+16),

While the largest decreases were in New York (-13,571), Pennsylvania (-3,506), Texas (-3,186), Georgia (-2,958), and Wisconsin (-2,034).

June 2019 U.S. Employment Report Recap

The Fed Chair Powell came out with a more dovish tone as expected at the last FOMC following market fatigue from the trade wars and the resultant uncertainty. There has been an ongoing campaign by US Presdent Trump calling for lower rates and criticising the Federal Reserve for raising in the past year.  Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. In February American wages hit their highest levels in a decade at 3.4%, but has fallen back to 3.1% in May.

The market expected the June report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of  158,000 new jobs, it came in much higher than expected last month at 224,000. Logic suggests a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Unemployment is near a 49 year low with higher participation and the two month NFP revision was -11,000 change to jobs last month.

However, the combination of weaker PMI readings and skill shortages amid a low unemployment rate of 3.7% pose downside risks. More important could be the earnings data, which missed expectations in April and May. Any further cooling of pay growth would raise the odds of the FOMC’s next policy change being a rate cut.

US Jobs June 2019

Employment:

  • Non-farm payrolls 224k vs +158K expected, Prior 72K (revised from 75K)
  • Unemployment rate 3.7% vs 3.6% expected/prior
  • Participation rate 62.9% vs 62.8% expected.prior (63.2% highest since 2014)
  • Underemployment rate  vs 7.1 % prior
  • Two month net revision -11k  vs Prior -75K
  • Manufacturing payrolls +17k vs +4k Prior ( April was first loss since Oct 2016)
  • Private payrolls 191k vs 90K Prior, expected

Wages:

  • Average hourly earnings +0.2% m/m v +0.2%/+0.3% m/m Prior/Expected
  • Average hourly earnings + 3.1% y vs 3.2% exp, Prior 3.1% y/y

US Jobs June 2019 Earnings by Industry

Household Survey Data

Both the unemployment rate, at 3.7 percent, and the number of unemployed persons, at 6.0 million, changed little in June.

Among the major worker groups, the unemployment rates for adult men (3.3 percent), adult women (3.3 percent), teenagers (12.7 percent), Whites (3.3 percent), Blacks (6.0 percent), Asians (2.1 percent), and Hispanics (4.3 percent) showed little or no change in June.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.4 million in June and accounted for 23.7 percent of the unemployed.

The labor force participation rate, at 62.9 percent, was little changed over the month and unchanged over the year. In June, the employment-population ratio was 60.6 percent for the fourth month in a row.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 4.3 million in June. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. 

In June, 1.6 million persons were marginally attached to the labor force, little different from a year earlier. (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 425,000 discouraged workers in June, little changed from a year earlier. (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 1.1 million persons marginally attached to the labor force in June had not searched for work for reasons such as school attendance or family responsibilities.

US Jobs June 2019. Industry

Establishment Survey Data

Total nonfarm payroll employment increased by 224,000 in June. Employment growth has averaged 172,000 per month thus far this year, compared with an average monthly gain of 223,000 in 2018. In June, notable job gains occurred in professional and business services, in health care, and in transportation and warehousing.

Professional and business services added 51,000 jobs in June, following little employment change in May (+24,000). Employment growth in the industry has averaged 35,000 per month in the first half of 2019, compared with an average monthly gain of 47,000 in 2018. Employment in health care increased by 35,000 over the month and by 403,000 over the past 12 months.

In June, job growth occurred in ambulatory health care services (+19,000) and hospitals (+11,000). Transportation and warehousing added 24,000 jobs over the month and 158,000 over the past 12 months. In June, job gains occurred among couriers and messengers (+7,000) and in air transportation (+3,000). Construction employment continued to trend up in June (+21,000), in line with its average monthly gain over the prior 12 months. Manufacturing employment edged up in June (+17,000), following 4 months of little change. So far this year, job growth in the industry has averaged 8,000 per month, compared with an average of 22,000 -3- per month in 2018.

In June, employment rose in computer and electronic products (+7,000) and in plastics and rubber products (+4,000). Employment in other major industries, including mining, wholesale trade, retail trade, information, financial activities, leisure and hospitality, and government, showed little change over the month.

In June, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.90, following a 9-cent gain in May. Over the past 12 months, average hourly earnings have increased by 3.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $23.43 in June.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in June. In manufacturing, the average workweek edged up 0.1 hour to 40.7 hours, while overtime was unchanged at 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls held at 33.6 hours.

The change in total nonfarm payroll employment for April was revised down from +224,000 to +216,000, and the change for May was revised down from +75,000 to +72,000. With these revisions, employment gains in April and May combined were 11,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 171,000 per month over the last 3 months. 

The Employment Situation for July is scheduled to be released on Friday, August 2, 2019, at 8:30 a.m. (EDT)

Other US June Employment Component Releases

US June ADP Job Report

  • ADP June US employment +102K v +140K expected, Prior +27K (revised to +41K)
  • Goods producing -15K
  • Service producing +117K
  • Small -23K
  • Medium +60K
  • Large +65K

ADP JUne 2019

US June Challenger Job Cuts

Challenger Jobs 7 2019

2019 June Job Cut Report: Challenger Report Shows Highest First-Half Total Since 2009

Released by Challenger, Gray, and Christmas Inc -3 July 2019  

  • US June Challenger job cuts +12.8% vs +85.9% y/y prior
  • Layoffs 41.98k Prior 58.58k

U.S.-based employers announced plans to cut 140,577 jobs from their payrolls in the second quarter of this year, down 26% from the 190,410 cuts announced in the first quarter. Despite the drop, Q2 cuts are 34% higher than the 104,800 cuts announced in the same quarter last year, according to the latest report on job cuts released Wednesday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.

Last quarter’s total is the highest for the second quarter since 2015, when 147,458 cuts were recorded. So far this year, employers have announced plans to cut 330,987 jobs, a 35% increase from the 245,179 cuts announced through the first half of last year. This year marks the highest first-half total since 2009, when 896,675 job cuts were announced.

“The second quarter is historically the slowest period for job cut plans. Companies typically have not determined staffing decisions by this point, either because they are in the middle of or are only approaching their fiscal year’s end by June,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc. Employers announced 41,977 cuts in June, down 28% from the 58,577 cuts announced in May. Despite the monthly drop, June’s cuts are 13% higher than the 37,202 cuts announced in June of last year. This is the eleventh consecutive month job cuts are higher than the corresponding month the year prior.

“Job cuts are trending higher overall. In addition to Retail, we’ve seen significant cuts in the Industrial Manufacturing and Automotive sectors in recent months,” said Challenger. Retail continues to lead all sectors in 2019 with 53,248 cuts, 7,187 of which occurred in the second quarter. That is 27% fewer cuts than the 73,066 announced in the first half of 2018. Companies in the Industrial Goods sector have announced 47,651 cuts, 562% higher than the 7,194 announced through June of 2018.

Meanwhile, Automotive makers and suppliers announced plans to cut 32,350 jobs through June, a 190% increase over the 11,165 cuts announced in the first six months of 2018. “Manufacturers are grappling with not only technological changes, but also increased competition, tariffs, changes in consumer behavior, and skills shortages. The Automotive sector particularly has experienced some setbacks, as consumer demand for traditional vehicles wanes,” said Challenger.

Companies in the Technology sector announced 21,777 job cuts through June, up 266% from the 5,942 cuts announced in the same period last year. Energy sector job cuts are up 185% over last year, with 14,527 cuts so far this year compared to 5,088 announced through June 2018. Related source: imgur.com Cuts in the Media industry continue to take their toll on news organizations. Through June, Challenger has tracked 7,775 media cuts, over 3,600 of which occurred at news outlets. That’s compared to 6,435 media cuts through June 2018.

Last year ultimately saw 15,474 job cuts in the media, with 11,878 occurring in news, according to Challenger tracking. The biggest blow to the news media last month came from the closing of the Youngstown Vindicator in Ohio, costing 144 employees and an estimated 250 carriers their jobs.

Note: Challenger has updated the names of two industries to better describe the companies that are tracked therein. “Computer” will now be labeled “Technology” and “Commodities” will now be called “Mining.” Challenger is also breaking out Financial Tech firms, which will be referred to as “FinTech.” These changes are represented in Table 2 (Job Cuts by Industry) and Table 7 (Announced Hiring Plans).

US Weekly Jobless Claims week ending June 29 2019

  • US initial jobless claims 221K versus 223K estimate. Prior week revised higher to 229K vs 227K
  • Four-week average 222.25K versus 221.75K, 4 week average 1686.5K vs 1688.25K last week
  • Continuing claims 1686K versus 1675K estimate. Last week 1688K revised higher to 1694K

The largest increases in initial claims for the week ending June 22 were in California (+5,643), New Jersey (+5,580), Massachusetts (+4,660), Connecticut (+3,719), and Maryland (+1,742),

The largest decreases were in Pennsylvania (-947), Illinois (-738), Puerto Rico (-640), Texas (-587), and New York (-504).

Source: AFP, Challanger, DOL, TradersCommunity Data, BLS

From The TraderCommunity Research Desk

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