Big gain in US jobs overnight. Rumours of a 75bps hike in September. Odds now at 70% compared to 34% prior to the data release.
But not only did July blow away expectations, but both previous months were revised higher: the change in total nonfarm payroll employment for May was revised up by 2,000, from +384,000 to +386,000, and the change for June was revised up by 26,000, from +372,000 to +398,000. With these revisions, employment in May and June combined is 28,000 higher than previously reported.
The "surprising" gain in Jobs overnight seems to fly in the face of the data out the previous day.
This
Bloomberg headline from July 21st says it all
US Jobless Claims Hit Eight-Month High as Labor Market Cools
- Initial unemployment claims increased last week to 251,000
- Continuing claims up 51,000, largest advance since November
As can be seen below, the inital jobless claims have been going up since march.
The kicker is the continuing employment in the bottom has rolled over and is starting to rise as seen in the bottom of the graph below..
Prior to that, one could argue that those losing/quitting their jobs were going straight back into another one, but the stats below suggest that scenario is becoming more and more difficult to sustain.
So how do we reconcile the fact that unemployment claims, both new and continuing, are heading up, but record job creation and new hiring is ongoing?
Part of it can be explained by more and more people having multiple jobs. Another factor is people who have taken and quit more than one job in the survey period. Another factor might be that the figures are Bullsh*t and have been massaged to suit the desired outcome.
Other factors such as the Californian law known as AB% that severely limits the ability of workers in California to be contractors,, and many have been shifted to employees from being on a contract basis.
Or it could be a combination of all of the above.
Mick