[6/6] Employment Situation Report Analysis - Is the labor market really good?

Takeaway

The overall picture still indicates resilience in the labor market with continued positive job creation and a stable unemployment rate. However, the report shows signs of cooling and potentially weakening labor market due to the deceleration in job growth, labor force contraction, downward revisions, and declines in some cyclical sectors. The economy is not showing clear signs of a sharp collapse, but rather a slowdown from previous robust growth.

• Did it meet consensus?

  • Unemployment rate 4.2% vs Exp. 4.2%

  • Non-Farm Payrolls 139K vs Exp. 130k

    • Break-even Employment is 100K per month per Fed

  • What Bloomberg Economists Says..“That means the unemployment rate held steady for the ‘wrong’ reasons – not because jobs are plentiful, but because workers are dropping out.”

• The market reaction was positive as the market reacts more sensitively to changes in non-farm payroll numbers than to the unemployment rate in the short term

• There are mixed signals of weakening and resilience, but the job market has been in a downtrend

  • The moment when the downward trend bottoms out and begins to reverse is important rather than just numbers

Mixed Signals of strength and weakening

Signs of potential weakening:

• Slowing...