the job market further weakened - interpretation of the us employment data in august 2024
2024-09-09
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(the author of this article is zhong zhengsheng, chief economist of ping an securities)
the new non-agricultural data is not strong.the number of new non-farm payrolls in the united states rebounded to 142,000 in august 2024, but was lower than expected, and the previous value was significantly revised down; manufacturing employment was the biggest drag, while employment in the service industry and government departments rebounded. at present, the trend of new non-farm payrolls has slowed down significantly, and quality problems of non-farm data still exist, including the divergence between household survey and enterprise survey data, and the increase in part-time jobs is higher than full-time jobs, highlighting the pressure of the slowdown in the us job market. from april to august this year, the average monthly increase in non-farm payrolls in the united states was only 135,000, lower than the average of 166,000 in 2019.
the u6 unemployment rate and the “sam index” continued to rise.the u3 unemployment rate in the united states fell back to 4.2% in august, but the u6 unemployment rate (including all those who are barely counted as the labor force and the total population working part-time for economic reasons) continued to rise to 7.9%, setting a new high in the past three years; the labor force population increased slightly month-on-month, and the labor participation rate remained unchanged at 62.7%. the official "sam index" further increased from 0.53 to 0.57, reflecting the increasing marginal pressure in the job market.
other employment data was mixed.the average hourly wage of non-farm pay in the united states rebounded both month-on-month and year-on-year in august, higher than expected. the number of job vacancies in the united states fell more than expected in july, and the ratio of job vacancies to the number of unemployed people fell sharply and fell below the minimum value in 2019 for the first time. the latest "small non-farm payrolls" fell for the fifth consecutive month; the latest number of initial unemployment claims fell.
risk assets are under pressure.after the release of the august non-farm data, the market's concerns about the weakening economy remained, and risky assets such as us stocks and crude oil were under pressure. on september 6, the three major us stock indexes closed down collectively, with the nasdaq index falling 2.55%, and a cumulative decline of 5.77% for the whole week. the 2-year us treasury yield fell 9bp to 3.66% on the same day. the 10-year us treasury yield closed down 1bp to 3.72%, but fell 19bp for the whole week. the us dollar index closed up 0.12% to 101.18 on the same day, down 0.54% for the whole week. the spot price of gold fell 0.14% on the same day and fell 0.29% for the whole week. the wti crude oil futures price fell 2.14% on the same day and fell nearly 8% for the whole week. cme data showed that on september 6, although the probability of a 50bp interest rate cut in september this year fell from 41% to 30%, the market increased its bets on the extent of interest rate cuts in the next year.
in summary, the latest employment data is slightly better than last month, but not impressive, and the trend of cooling in the job market has been further confirmed. the current data may not be enough for the fed to cut interest rates by 50bp for the first time, because this move may implicitly admit that the interest rate cut is not timely enough, which may aggravate market recession concerns. but on the other hand, the market is also worried that the fed is too conservative when it starts to cut interest rates, and the economy may decline faster than the fed expects, forcing the fed to increase the extent of future interest rate cuts. for some time to come, including after the fed's first interest rate cut, market sentiment may continue to remain in a risk-off state until more economic data improves.
risk warning:the us economic downturn exceeded expectations, the us and international geopolitical situation exceeded expectations, and the pace and magnitude of the federal reserve's interest rate cuts exceeded expectations.
this article only reflects the author’s views.
