Longest Job Expansion Continues: 82 Months

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Today the Bureau of Labor Statistics reported jobs data for July 2017. Payroll employment was higher than expected at 209,000. We saw a broad range of job gains outside the utility sector.

https://www.bls.gov/news.release/pdf/empsit.pdf

“Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was
little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased
in food services and drinking places, professional and business services, and health care”

For 2017 I was looking for monthly job creation numbers to come in between 140K -170K.  We are off and running at  a pace of 184,000 which is slightly lower than last years 187,000 level. The three month average is running at 195,000 so in my view the job market is exceeding expectations. Also, just like the manufacturing recession didn’t create big job losses in other areas of the economy, the retail Armageddon that many American bears have been predicting would be the harbinger a total economic collapse in 2017,  has pretty much been a dud.

The bleeding of jobs in the retail sector has mostly stopped and manufacturing had another good print to off set the weakness in retail. However, we need to be realistic about how many new manufacturing jobs can be created  in this cycle. For more information on that sector see the article last year:

https://loganmohtashami.com/2016/12/09/manufacturing-under-president-donald-trump/

From BLS:
https://www.bls.gov/charts/employment-situation/employment-by-industry-monthly-changes.htm

AUGUST JOBS BREAK

A breakdown of pay per sector.

From BLS:

https://www.bls.gov/charts/employment-situation/employment-and-average-hourly-earnings-by-industry-bubble.htm
August Wage Breakdown

As always, the longest job expansion continues and we are not that far off from doubling the previous record.

82… As in 82 consecutive months of jobs growth, by far the longest streak in history.

82

The U6 rate was unchanged and we still have room to go down to the natural floor rate of 8%.

From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2017/08/04/july-jobs-report-209k-new-jobs-added-ur-4-3

August U6

All in all, this was a decent report with numbers in line with the trend in job reports of the past months.  Inflation is falling on a year over year basis which makes the Fed’s case for the 3rd rate hike less likely. I personally don’t think they should raise rates for the 3rd time this year unless we see inflation pick up. That inflation will be harder to come by as rent inflation looks like it has peaked in terms of rate of growth.

From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2017/08/01/two-measures-of-inflation-and-fed-policy

AUGUSTPCECPI

The rebound in world trade as made the world economies look a lot better. In Europe, exports as a percentage of their GDP is much higher than ours. We have seen a nice rebound in rig counts and in manufacturing  jobs from the recent recession in those sectors. The low bar we had for corporate earnings from  financials, energy and mining will fade creating a much different back drop for 2018. However, for now, the market and economy is moving a long nicely and quietly.

Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing marketLogan Mohtashami is a senior loan officer at AMC Lending Group,  which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data  daily on his own facebook page https://www.facebook.com/Logan.Mohtashami