US: Non-farm payrolls disappointed - ANZ

Research Team at ANZ, suggests that the Non-farm payrolls disappointed, rising 151k in August while the unemployment rate was steady at 4.9%, average earnings eased to 2.4% y/y (2.7% y/y), and the average work week fell to 34.3 vs 34.5 hours.

Key Quotes

“Private payroll growth slowed to 126k vs 225k in July, but that is coming after strong growth in June and July. Despite being the second weakest print of the year, some context is needed, with still solid numbers being printed and the 3m average lifting to 230k. Markets hardly took it as a bad number either, with conjecture from both sides of the fence on what it means for the Fed. Some pointed to weakness, notably softening wage growth, while others noted job creation is still consistent with a solid rate of expansion. Our take is that the FOMC will continue to proceed cautiously, with a September rate hike a tad early.

The August private payrolls gain nevertheless was the second weakest print for that series this year. For example, health care employment slowed to 14k versus an average of 39k in the prior 12 months, and elsewhere across service industries employment growth was just a bit softer in general.

The US trade deficit narrowed to USD39.5bn in July (from USD44.7bn in June) as exports rose 1.9% m/m and imports fell 0.8% m/m. The trade deficit with China remains the stand out short-fall at USD30bn, which is something that may gain increasing attention as the US Presidential race comes increasingly into focus.

July Factory orders came in in line with expectations, rising 1.9% m/m and reversing the 1.8% decline in June.

Final durable goods data were unchanged from the preliminary reading of +4.4% m/m. The data provide some hope that the extent of investment weakness in Q2 may not be repeated in the current quarter.”