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* * * Original by Liu Jiaolian * * *
In early September, the U.S. Bureau of Labor Statistics (BLS) released employment data for August, of which non-farm employment growth (Non-farm Payrolls) and unemployment rate (Unemployment Rate) were the two most concerned by the market.
Non-farm employment growth:
In August 2023, the U.S. economy added 187,000 new jobs (revised down to 157,000 in July), exceeding market expectations of 170,000. However, this is the third consecutive month that job growth has been below the 200,000 threshold, indicating that labor market conditions are gradually easing, due in large part to the Federal Reserve's sharp interest rate hikes aimed at cooling inflation. Employment in healthcare (+71,000), leisure and hospitality (+40,000), social assistance (+26,000) and construction (+22,000) continues to trend upward. On the other hand, the transportation and warehousing industry lost 34,000 jobs, and the bankruptcy of large trucking company Yellow left about 30,000 workers unemployed. Information industry employment was little changed (-15,000), while employment in the film and recording industry fell by 17,000, reflecting the absence of Hollywood star actors, who are not counted in employment.
Positive: Employment growth exceeded expectations; it accelerated for three consecutive months in June, July, and August.
Negative: Far lower than 352,000 in the same period last year; the growth rate was lower than 200,000 for three consecutive months in June, July, and August.
Positive turns negative: The strong job market makes the Fed believe that it needs to continue to raise interest rates to cool the overheated market, or it gives the Fed confidence that continuing to raise interest rates or maintaining high interest rates will not cause a market recession. As a result, allowing interest rate increases or high interest rate policies to continue to be implemented will further put pressure on asset prices and trigger a possible recession.
Negative to positive: Consistent with the above logic, but in the opposite direction. The weak job market makes it easier for the Federal Reserve to decide to pause raising interest rates at the September FOMC meeting.
Unemployment rate:
The U.S. unemployment rate rose from 3.5% in July to 3.8% in August 2023, the highest level since February 2022 and higher than market expectations of 3.5%. The number of unemployed people was 6.355 million, an increase of 514,000; the number of employed people was 161.484 million, an increase of 222,000. The so-called U-6 unemployment rate, which also includes those who want to work but have given up looking and those who are working part-time because they cannot find full-time work, rose to 7.1% in August (from 6.7% in July), the highest level since 2022 the highest level since May. The labor force participation rate rose to 62.8% from 62.6%, the highest level since February 2020.
Negative: higher than the 3.7% in the same period last year; significantly higher than the expected 3.5%; a significant increase month-on-month. It's all bad news when it comes to unemployment.
Negative turns positive: Such a high unemployment rate has heightened concerns about a market recession. The Fed may consider pausing interest rate hikes to give markets some breathing room.
The fundamental reason for the logical opposite and transformation is still the opposition between labor and capital. The worse the labor market is, it will challenge the tightening of monetary policy and promote the loosening of monetary policy, thereby benefiting the capital market. In turn, the capital market also has the motivation to suppress the labor market through tight monetary policy, suppressing the benefits of labor (that is, the cost of capital) at a lower level. Because the total income is certain, if labor is divided more, capital can only be divided smaller.
Who the Fed led by Powell serves is very clear from the Fed's public views. This is not a conspiracy or secret, but an outright conspiracy. After every interest rate meeting, when it is decided to raise interest rates, Powell will explain on stage that inflation is still high, and another point is that employment growth is strong (overheated) and needs to be cooled down.
Powell's meaning is very straightforward: If you hit workers, you won't get more job opportunities, and your wages won't increase.
At least judging from the U.S. employment data in August, Powell singled out workers and has achieved an initial victory.
* * * Original by Liu Jiaolian * * *
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