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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MACRO ANALYSIS
- Much has been made of the surprise increase in the unemployment rate at Friday’s payrolls report, from 4.05% to 4.25% in July, but also how there were important caveats such as almost three quarters of the rise in unemployment coming from temporary layoffs (see the MNI Employment Insight).
- Digging into the status flows reveals some mixed signals:
- On the one hand, there was a strong increase in the seasonally adjusted flow from those who were previously employed to unemployed (from 1542k to 1834k, with the 292k increase being the largest change since Jan 2022).
- On the other hand, net flows between employment and unemployment pools were only 84k in July which meant it contributed just 0.05pp of the 0.20pp increase in the unemployment rate.
- The bulk of the increase in the unemployment rate instead came from net changes in those entering the labor force for work (0.15pps).
- We have seen some take this to downplay July’s rise in the unemployment rate as being down to the surge in immigration-driven population growth rather than an outright sign of economic weakness.
- We would however caution that when looking historically, this approach has only really seen large increases in net employment-unemployment flows in periods of deep recession (e.g. it had a material impact in 2008/09 but not 2001/02).
- Instead, we acknowledge that it was a surprisingly strong increase in the unemployment rate to a rate fractionally above the median FOMC participant’s long-term forecast (implying a modicum of slack is building) but with the above caveats that will be watched to see how much they unwind in the Aug payrolls report on Sep 6 before the FOMC meets on Sep 17-18.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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