No Inflation In These Payrolls

Payrolls for the month of June were a mixed bag, in that the payroll data was better than expected at the same time nothing else was. After a couple of months of ho-hum gains for the Establishment Survey, government hiring (mostly) boosted the latest monthly figure to +853,000. This brings the 6-month average up to +543,000, which is either really good and pointing to a reopening economy or not nearly enough because it doesn’t point to anything more than a reopening economy.

Right away, however, the CES figures contrast with the Household Survey which actually declined by 18,000 (which is why the unemployment rate ticked higher)While that’s not terribly unusual, the CPS figures are far more volatile on a monthly basis, it leaves the 6-month average for the HH at now less than 300,000 which equals only a slightly better than average stretch for the pre-COVID labor market.

Those aren’t even close to the level of sustained gains anyone should associate with a robust recovery from a huge contraction.

We don’t expect CES and CPS to match – they measure two different things – but given that this is supposed to be a full-blown boom with all the major obstacles finally and most completely removed it’s enough of a discrepancy to interject uncertainty about the underlying strength of the rebound outside of simple reopening. The latter is a necessary but by itself insufficient condition.

Not that there is anything wrong with jobs coming back; we still need millions of those. However, that was never going to be near enough on its own. For one thing, the passage of time, a lot of time, means the economy still has to cover last year’s losses plus more than a year of even minimal gains that didn’t happen (and still haven’t yet).

Perhaps even more concerning still, despite the clear boost in retail sales and goods spending due to Uncle Sam along the way, there’s barely any change in the employment trends dating back to last summer’s slowdown.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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