In the US on Friday, the August employment report showed job growth rising at the slowest pace of the year. Despite the slower than expected gain, the US stock indices rose with the S&P closing the week at the highest level on record (at 2007.71.). In global equity markets for the week, the Shanghai Composite rose by 4.93% and recorded the largest gain of the major indices. In Europe, the major indices also gained on the back of the ECB easing rates and announcing additional stimulus measures.
The Point and Percentage Changes of the Major Stock Markets around the globe
The US dollar was little changed on the day. For the week, the greenback was higher against all the major currencies with the exception of the Australian dollar. The dollar rose the most versus the British Pound (+1.63%). The pound fell on fear that Scotland referendum to become an independent country would pass and this would create uncertainty and potential upheaval in the UK markets (at least temporarily). The vote is to take place on September 18th. The dollar was also higher against the EUR as the ECB stimulative measures pushed their currency to the downside.
Change in the US Dollar vs. the major currencies in trading this week.
The US employment report was a disappointment although there were some bright spots as well. The negatives include (see infograph below):
- Non Farm Payroll for August came in at +142K vs 230K estimate. This was the lowest gain since the December 2013 weather impacted rise of 84K
- July NFP was revised up 212K from 209K (up +3K), but June was revised lower from 298K to 267K (down -31K)
- The Participation Rate ticked down to the low at 62.8 from 62.9 last month
- Professional & Business added 47K, Health sector added 37K, and Construction added 20K, but the rest of the sectors showed sluggish growth. Manufacturing showed no change from last month.
- Since the beginning of the Job Recession in February 2008, Mining (+172K), Professional and Business (+1.265 million jobs), Health (+2.627 million jobs) and Leisure and Hospitality (+1.109 million jobs), have added jobs. The other sectors, are still showing negative job creation since February 2008 including Manufacturing (-1.567 million jobs lost), Construction (-1.408 million jobs lost), Information (-359K), Financial (-314K), Government (-491K),and Trade /Transportation (-274K).
There were some bright spots:
- Unemployment rate dipped down to 6.1%. This is the lowest level since September 2008
- Underemployment rate fell to 12.0% from 12.2%, lowest level since October 2008
- The Duration of Unemployment continued to fall and is at the lowest level since March 2010
- In 2014, the average monthly job gain is 213K which is 19K higher than the 2013 average of 194K. However, this is down from 229K last month
Below is an infograph is a review of the current report and also shows the major trends for some of the components from the report.
INFOGRAPH: Trends in US Employment
