The seasonally finagled headline number for nonfarm payrolls for July increased 209,000. The consensus expectation of Wall Street conomists was for a gain of 220,000. The Wall Street media judged it a “miss.†But the number is the number. The Wall Street economist crowd’s guess was only a little off, considering the total numbers involved. The market plays this silly expectations game every month. It reacts accordingly for 20 minutes, then goes back to the business of whatever it was doing, which in the current case, was falling off a cliff.
The seasonally adjusted monthly gain in payrolls equated to an annualized gain of roughly 2.5 million or 1.8%. But actual, not seasonally adjusted (NSA), nonfarm payrolls fell by 1.1 million in July to a total of 138.7 million. July always shows a decline. The 10 year average change for July was a drop of 1.28 million. This July’s performance was slightly better than average.
The actual annual growth rate was +1.92%. The actual change in July was better than the 10 year average for this month and similar to the July 2013 change. July’s data was absolutely consistent with the trend of the past several years.
The annual rate of change has been between 1.55% and 1.92% for more than 2 years. This month’s reading hit the peak level reached in February 2012, while the Fed was in a QE pause. Meanwhile, the Fed has grown its balance sheet by 24% over the past year, and stock prices have risen 13% even after the big selloff of the past few days.
Meanwhile job growth has remained constant whether QE was going full bore, or was in a pause as in part of 2010, and again in 2011-12. Ben Bernanke’s theory was that stock price gains resulting from QE would stimulate jobs. After 5 1/2 years of massive Fed balance sheet expansion, it’s apparent that he was wrong. A 13% gain in stock prices in the past 12 months has not moved the needle on jobs growth or labor earnings.
