Every talking head today is screaming about the “resilient job market” ignoring two harsh realities: 1) revisions always happen which means the actual results may not be as strong, and 2) even if they are real, it’s because of the lagged effects of stimulus post-Covid-19 against a stock and bond market that are screaming a massive warning to all capital. There’s also nuance. I always say amateurs look to the right of the equal sign and pros look to the left. Let’s do just that.
https://twitter.com/leadlagreport/status/1710276818375209149
Nonfarm Payrolls, released by the Bureau of Labor Statistics, represents the number of new jobs created during the previous month. It is a key economic indicator that often influences the Federal Reserve’s decisions on monetary policy. In September, the U.S. economy saw a significant increase in nonfarm payrolls. The economy added 336,000 jobs, far exceeding the anticipated figure of 170,000.
Average hourly earnings witnessed a slight increase of 0.2% month over month and 4.2% year over year. Although these figures are slightly lower than the previous month’s data, they are still higher than the pre-pandemic rate, indicating a competitive labor market. The average weekly hours worked was reported to be 34.4, consistent with previous months.
Bullish for stocks! Yes! Soft landing? Hold on.
Why September Nonfarm Payrolls Are Bearish for Stocks
While the surge in nonfarm payrolls might seem like a positive sign, a robust economy doesn’t necessarily translate into a bullish stock market. If anything, it’s a lagging indicator. The majority of stocks aren’t showing much optimism. Consumer discretionary stocks continue to underperform.
If the job market is so strong, why is it that consumer stocks keep sucking wind? What does the stock market know that the talking heads don’t?
When we look beyond the headline numbers, the actual report looks like a complete disaster. Maybe, just maybe, THAT’s why consumer discretionary stocks are saying the consumer and jobs market is nowhere near as strong as the headlines would have you believe?
thoughts on the beyond the headline numbers ?
Full-time workers: -22K
Part-time workers: +151K
Multiple jobholders +123K
Unemployment Rate 3.8%, Exp. 3.7%
Hourly earnings 0.2% MoM, Exp. 0.3%
Hourly earnings 4.2% YoY, Exp. 4.3%
Plus teachers returning and seasonal employees helped— Honest Abe (@b1gball3rbrand3) October 6, 2023
The Bottom Line
Bottom line here Is simple. We have two scenarios. Either the data is real, and the jobs market is legitimately strong, in which case there is a disconnect with the message of consumer stocks all year, OR the data is weak beneath the surface (like the stock market) and none of this matters because a recession is inevitable.
I personally think it’s the latter. And if that’s the case, people are going to need more part-time work to deal with what’s coming next.
On the date of publication, Michael Gayed did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
