Explaining this jobs report is basically guesswork at this point. At this point we don’t know whether this very disappointing result is a significant data point that should lower projections of the economic trend or a one-off event that doesn’t say much of anything.
The market reaction to this morning’s jobs numbers is actually more interesting than the numbers themselves. Unlike other days this week when good economic numbers have pushed stocks and bonds downward–because the good news raised fears that the Federal Reserve might decide to begin to taper off its $85 billion in month asset purchases early—today’s good news is being treated as good news for the financial markets.
The GDP and jobs numbers have left the economy, the Federal Reserve, and the stock market pretty much where they all were before the data hit. The economy isn’t falling off a cliff but it isn’t growing fast enough to lead the Fed to move up the date of its taper from sometime in 2014.
Today, the U.S. stock market seems convinced that the GDP and jobs numbers to be released tomorrow (third quarter GDP) and Friday (jobs for October) will show a weak U.S. economy that will increase the odds that the Federal Reserve will hold off any reduction of its $85 billion in asset purchases well into 2014.
The U.S. economy added 169,000 jobs in August. That was slightly below the 177,000 jobs economists surveyed by Briefing.com were expecting. But aggregate earnings grew by 0.6%, signaling that consumption will stay strong enough to drive the economy
The strength is strong enough to keep alive talk that the Federal Reserve will begin to taper off its $85 billion in monthly purchases of Treasuries and mortgage-backed securities in September. But the weakness in the jobs numbers is weak enough to keep doubts alive about a September beginning to The Taper.
The economy generated a net 175,000 new jobs in May. That was above the consensus expectations of 159,000 jobs. And above the 165,000 figure for April. And yet, the official unemployment rate climbed in May to 7.6% from 7.5% in April
It ‘s clear that the driver for the market today is related to tomorrow’s jobs report for May. And that makes sense since the Federal Reserve has said that its decision on when to begin tapering off its monthly $85 billion in purchases of Treasuries and mortgage-backed assets will depend on the data. But it’s not clear to me what the action in the financial markets today means that markets are anticipating tomorrow.
U.S. payrolls grew by just 88,000 workers in March, the Labor Department reported this morning. That was the smallest gain in nine months.
