As with the Manufacturing PMI report, however, the details point to a far less rosy picture than the headline figure and market reaction suggest, again well summarized by Gluskin Sheff’s David Rosenberg via The Pragmatic Capitalist here in which he notes (we quote):
- Aggregate hours worked were flat.
- All the employment gains were part-time — full-time employment, as per the Household Survey, plunged 254,000.
- Those working part-time for “economic reasons” surged 331,000 — the biggest increase in six months.
- While private payrolls were better than expected, 10,000 of that +67,000 tally reflected returning construction workers who had been on strike.
- Manufacturing employment was down 27,000 and total goods producing jobs were flat — hardly signs of a robust economic backdrop.
- The diffusion index for private payrolls actually fell to 53.0 from 56.7 in July — a seven-month low. It was 68.0 at the April high, which is consistent with an economy slowing down to stall-speed.
- The labor market gap widened with the all-inclusive U6 unemployment rate rising to a four-month high of 16.7% from 16.5% in July. This is why the odds are stacked against a sustained acceleration in wages.
In sum, last week’s market movers suggest a rally that is a mere countermove in the longer term downtrend, particularly considering the hurdles that lie ahead as discussed below.
