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Jobs Dip, But Unemployment Falls: What's Next?
11 Aug
Summary
- Unemployment rate decreased from 4.2% to 4.1% despite weaker jobs report.
- Core CPI expected at 2.4% with headline CPI at 3.4% due to housing costs.
- Market stalling due to oil prices above $81 and restrictive interest rates.
The recent payrolls report showed a concerning decline, with 50,000 jobs lost in education, a figure not fully explained by seasonal adjustments. However, the unemployment rate simultaneously dropped from 4.2% to 4.1%, suggesting that hiring is constrained by supply-side factors rather than a lack of demand.
These supply issues are reportedly driven by demographic shifts and immigration patterns. Despite the decelerating hiring trend over the past four months, consumer strength is expected to persist, supported by robust capital markets and steady wage growth.
Inflationary pressures are easing, with core CPI anticipated at 2.4% this Wednesday, though headline CPI is projected to be 3.4%. This significant spread is attributed to the impact of housing valuations and rents on the CPI.
Market performance is currently being hampered by oil prices exceeding $81 and interest rates moving towards a restrictive stance. Typically, a contracting payroll report would lead to lower yields, but this has not fully materialized as markets await further clarity.
