August unemployment data were released this morning and the numbers were not as bad as expected. The rate of job losses is slowing, and some economists think that the rate of jobs lost should reach zero sometime around year end with job growth returning in early 2010.
- Better than consensus job losses (216,000 versus 230,000 consensus and compared to high of over 700,000 earlier in the year)
- Trajectory moving in the right direction
- Average hourly earnings rose a better-than-expected 0.3 percent (consensus 0.2 percent)
- It certainly seems that additions to the unemployment roles are nearing an end.
- This is an efficient hiring environment. Employers have a huge candidate pool and wage elasticity which will benefit the bottom line.
- Big negative revision to last month's non-farm payrolls
- Although second derivative is getting better (rate of decline in jobs is getting smaller), job losses continue (216,000 compared to 230,000 consensus)
- Rate increased to 9.7 percent from 9.4 percent — the highest rate since June 1983
- The "real" unemployment rate — all unemployed, underemployed, and discouraged workers — ticked up 0.5 percentage points to 16.8 percent.
- Economy has lost about 7 million jobs since start of recession in December 2007
Data confirms our belief that the a strong economic rebound is not forthcoming. We will see a near-term boost from stimulus initiatives (cash for clunkers, housing incentives, quantitative easing, etc.), but strong end demand is unlikely to materialize given the employment situation and a need for consumers to repair their balance sheets.