Rubber Duckies and the Jobs Number
Given the volatility of recent U. S. labor market data, markets will pay special attention to Friday’s Employment Situation report. Current expectations are for 175-180,000 jobs added, somewhat better than the 3 month average of 140,000. Wage growth will be the other statistic of note, with last month’s 2.6% advance over last year as the benchmark. Looking at individual tax/withholding receipts (available from the U. S. Treasury) for the month of July, there is reason for caution on both indicators. July ‘Withheld’ receipts – those tax and withholding payments that come straight from wage earner pay stubs – are down 1.0% year over year.
This data series can be choppy, and looking at the three month trailing average yields a 3.1%. That’s a touch slower than the 2016 YTD comp of 3.3%, and tells us to not expect too much from Friday’s number.
Also worth noting: YTD non-withheld tax receipts (such as those that come from ‘Gig economy’ workers) are down 6.5%, and July’s comp is 15% lower than a year ago.
Last, corporate tax receipts are down 11% YTD, and if the current pace of these payments holds it will be the first negative comp since 2011. Bottom line: if the tax man isn’t as busy, can the U. S. economy really be expanding?
This post was published at Zero Hedge on Aug 4, 2016.
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