The headline new employment rose 224,000 last month, far in excess of the 171,000 three month average. The global economy is reducing its economic activity, so the increase in domestic jobs looks suspicious. Half the jobs gain came from the hypothetical birth-death model. Employment growth in five months from actual data from companies (not from the birth-death model) has been zero. Multiple job holders increased 301,000, if not for them, the jobs number would have been negative. Almost 60% of Household survey employment growth was from self-employed people. So these could be starving rookie independent contractor sales reps, not people with real jobs. The age 25-55 prime aged sector only increased by 29,000 last month and for the past half year it decreased by 168,000.
The ECRI research company uses a comprehensive coincident Employment index which has fallen to its worse level in 6 years.
The number of people unemployed dropped by 400,000 since December and the number employed dropped by 200,000. The bottom line is 200,000 less people are working since December. That’s 0.13% less employment or annualized it is 0.26% less. Adding in the population increase that implies employment needs to grow 100,000 a month to keep up with the population (600,000 new jobs needed in a half year) thus the job market is even weaker than the headline suggests. We are missing jobs for the 200,000 reduced number of people working and the 600,000 of new jobs needed for the population increase which is a total of 800,000 needed just to avoid making the percentage of unemployed worse (annualized that’s 1.6million, which is roughly 1.1% of the working population who are worse off).
The six month Moving Average of employment (per the Establishment Survey) recently topped out in June, 2018 dropping from 240k to 175k. It had an ever bigger top out in Feb., 2015, thus implying a downward trend for the past four years.
I expect rising unemployment which leads to higher bond prices (lower yields), and which leads to increased gold prices as a fear of QE stimulus and anger at low yields will provoke investors to buy gold. Investors need independent financial advice about the risks of a reversal in the labor market leading to a recession.