This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
July non-farm payrolls gained 209,000 versus estimates of 180,000. June payrolls were revised 9,000 higher to 231,000. It’s worth noting that manufacturing added 16,000 jobs (est. 5,000) in July, the strongest gains since March. So far in 2017, manufacturing employment has been expanding at the briskest pace in years, with y-t-d gains of 82,000 dwarfing comparable 2016’s zero and 2015’s 12,000. The unemployment rate dipped a tenth in July to 4.3%. Unemployment bottomed at 4.4% during the previous cycle low back in 2007. In fact, the unemployment rate has not been lower than the July level since February 2001.
The recent narrative holds that the economy has been in an extended ‘soft patch’. In general, economic data have somewhat missed expectations. ‘US Car Sales Continue to Skid, Drop 5.7% in July.’ The decline in automobile sales was viewed as confirmation of a slowing manufacturing sector. Ongoing travails in retail also support the view of economic stagnation. The labor participation rate remains a dismal 62.9%.
The narrative of a weakening in both economic activity and inflationary pressures serves the markets well. With Fed funds now near the Federal Reserve’s ‘neutral rate,’ rate normalization has apparently about run its course. Even after Friday’s stronger-than-expected job gains, the market places the probability of another 2017 hike at less than 40%. What could be more bullish than so-called rate ‘normalization’ that avoids any tightening of financial conditions whatsoever? The Carefree Bond Market has been cruising along the PCH with the top down in a slick new autonomous sports car.
This post was published at Wall Street Examiner by Doug Noland ‘ August 5, 2017.