U.S. Jobs Data Comes in Below Expectations
Aug 4, 2023
The U.S. economy continues to exhibit strength within the labor market, as the July U.S. jobs report showed. The nonfarm payrolls reading produced a headline gain of 187,000 vs. the consensus forecast of 200,000, while the prior reading was revised lower from 209,000 to 185,000. The household employment survey showed the unemployment rate (U3) dropped to 3.5% from 3.6%.
Despite the miss relative to expectations on headline jobs growth, the figures are more than sufficient to keep the U.S. labor market on solid footing. According to the Atlanta Fed Jobs Calculator, the U.S. economy needs to add only 98,000 jobs per month through the rest of 2023 to keep the unemployment rate at 3.6% or lower.
Call it déjà vu, but the price action leading into the July U.S. jobs report was eerily similar to that preceding the June U.S. jobs report, released right after the July 4 holiday. In early July, markets got spooked by a string of hot U.S. economic data, including the ADP Employment Change report, not dissimilar from what happened this week. And as in early July, the release of the official government measure today provided some solace as the numbers the Federal Reserve cares about most did not signal any imminent overheating of the U.S. labor market.
The net result has been a rebound in U.S. equity futures, led by /NQ, while bonds across the curve have stopped bleeding. Both /ZN and /ZB, which produced outsized losses in recent days, are rallying off their lows, giving room for /GC and /SI to post modest gains as well.
If markets respond to the July U.S. jobs report in a manner similar to what happened after the June U.S. jobs report, it’s possible we’ve seen the lows for the month in both stocks and bonds.
Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
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