Economists React to NFP data

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WSJ:  U.S. employers added 146,000 jobs to nonfarm payrolls in June, the Bureau of Labor Statistics reported on Friday, well below the average forecast of economists, who expected a more robust gain of around 200,000 jobs.  Here’s a sampling (via WSJ) of what economists on Wall Street and elsewhere had to say about the report:

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Looking beyond the volatility of the monthly payroll employment numbers, the trends in the U.S. labor market are consistent with an economy that is growing at a rate of around 3.5%. These data, along with other indicators published in the last two months, support the Fed’s view (and Global Insight’s) that the U.S. recovery is settling down into a period of close-to-trend growth.
– Nariman Behravesh, Global Insight

Clearly, the wages of ordinary working Americans continue to lag inflation with no relief in sight. Overall, jobs growth has been erratic and unexceptional. With unemployment at 5% and wages continuing to lag inflation, the quality of jobs created has been mediocre at best and discouraging to be realistic.
– Peter Morici, Robert H.Smith School of Business, University of Maryland

A big part of the relative softness of the June payroll reflects a much more aggressive seasonal factor than we expected. The seasonal is always negative in June, to offset the impact of summer seasonal hiring, but it was 133K more negative in June this year than last year. This is the biggest year-over-year shift in the seasonal since July 2004, when payrolls were also relatively soft.
– Ian Shepherdson, High Frequency Economics

Manufacturing news has been mixed. We conclude that manufacturing trends have softened significantly relative to the overall pace of economic activity, but the recent jump in the Manufacturing ISM to 53.8 leaves a mixed view on manufacturing. In a period of uncertainty, the Fed is likely to maintain the status quo.
– Stephen Gallagher, Societe Generale

Household employment has been somewhat stronger rising at 379,000 per month over the last three months and 207,000 per month over the last year. The unemployment rate continues to decline and is approaching territory where the Fed has traditionally been concerned about inflation pressures.
– John Ryding, Conrad DeQuadros, Elena Volovelsky, of Bear Stearns

[NOTE:  I warned earlier about this nonsense -- here's a perfect example of selecting data which supports existing views. IMHO, these clowns are now the Jack Grubmans of economics. Nuff said.]

The report may not have been quite as mediocre as the headline number implies. First of all, there was a large drop in motor vehicle payrolls. It is not clear if there were early shut downs or this was a true indication of cutbacks. Along those lines, dealers reduced workers but there was a large increase in sales so I am not sure at all what is going on with the vehicle sector.
– Joel L. Naroff, Naroff Economic Advisors

We had expected the leisure and temp sectors to get at least a modest boost from the combination of a relatively late survey period and anecdotal reports of increased summer hiring. However, the temp component continued to show some underlying moderation (up only 9,000 in June). Meanwhile, jobs in the leisure sector rose just 19,000 — a bit below the average seen over the past year.
– David Greenlaw and Ted Wieseman, Morgan Stanley

Source:
Economists React
July 8, 2005 9:57 a.m.
http://online.wsj.com/article/0,,SB112082871460980737,00.html

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