US non-farm payroll: rearview mirror looks ugly, slalom continues
Nicholas Hyett, investment manager at Wealth Club said: “US employment numbers are often described as the world’s most important economic statistic – and the world’s certainly watching today.
US GDP showed some unexpected strength earlier – but a lot of that was down to tariff related noise in the numbers. Weak underlying growth led to a split Federal Reserve decision on interest rates, with two votes to cut interest rates by 0.25%, the first time there have been two dissenting votes since 1993.
In theory non-farm payrolls should provide a clearer picture of what’s going on. If so, it’s not a pretty one. July’s job creation is slower than expected, but the bigger news is the major revision to May and June’s job numbers which are down a combined 258,000. If Fed Governors were looking for reasons to cut interest rates this is one.
The problem is that for all the extra clarity, these numbers still only show what’s happening in the rearview mirror. In hindsight the journey so far has been bumpier and more precarious that it seemed at the time, but the road ahead is still clouded in fog. Just today, President Trump has reignited the global trade war with major knock-on effects for stock markets and the global economy. Investors and policymakers will be stuck slaloming through unexpected obstacles for some time yet.”