I am on a tight schedule this morning, leaving in a few minutes for a meeting in Salem, so I don't have time for extended comments on this morning's employment report. The report surprised on the upside, with nonfarm payrolls adding 163k jobs, a clear improvement from the last three months:
On the surface, this would seem to weigh against additional Fed action at their September meeting. I would say the counterargument is two-fold. First, wage growth continues to stagnate:
Low wage growth is a consequence of sustained weakness in labor markets and should be seen as further evidence inflation will remain "at or below" levels consistent with the Fed's mandate. Second, the internals on household survey were weak. Employment dropped 195k, reducing the employment to population ratio to 58.4, while the ranks of the unemployed grew by 45k. The labor force participation rate declined further to 63.7, down from 64.0 a year ago. No progress on the unemployment rate, which edged up a notch.
The establishment survey argues for a steady hand, the household survey argues for easier policy (arguably, even the establishment survey argues for easier policy, but I don't think the Fed sees it this way). Also note that we have another employment report before the next meeting. That said, if I had to choose today, I think that the establishment report would get the upper hand, pointing to steady policy in September. But there is lots of data between now and then.
For more employment charts, visit Calculated Risk. Gotta run...