Results of the August 2015 US employment report:
- Net change in payrolls 173K vs 215K prior
- Two-month net revision +44K
- Change in private payrolls 140K vs 204K expected
- Unemployment rate 5.1% vs 5.2% expected (lowest since April 2008)
- Participation rate 62.6% vs 62.7% expected
- Avg hourly earnings +0.3% m/m vs +0.2% m/m expected
- Avg hourly earnings +2.2% y/y vs +2.1% exp
- Underemployment rate 10.3% vs 10.4% exp
- Manufacturing jobs -17K vs +5K exp
This is a tougher read than it looks. The jobs number is obviously soft and private jobs are especially soft but the revisions and avg hourly earnings are strong. The unemployment rate fell due to a drop in participation but the Fed is likely to see that as part of the natural trend.
The US dollar kicked 50-pips lower first but USD/JPY then rebounded more than a cent. I don't see a great reason to go either way.
Basically, there is something for everyone in this report. If you thought the Fed was leaning to the dovish side, you look at net jobs and falling participation. If you thought they were going to hike, then avg hourly earnings and the lower unemployment rate are the focus.
Looking at the charts and overall sentiment, I think this just adds to the confusion and that's probably negative for stocks and the US dollar will retrace after the initial buying filters through.
