Nonfarm payrolls (jobs created)We are inching closer to a recession and economic turmoil.
Stock markets ALWAYS drop when this happens.
USNFP trade ideas
US Unemployed to Employed as Indicator of Job Market HealthIn this chart, we use the following symbols: ECONOMICS:USNFP , FRED:UNEMPLOY
ECONOMICS:USNFP represents the number of jobs created in a month. FRED:UNEMPLOY represents the number of unemployed individuals for a month.
Assuming exactly 1 payroll per person , the ratio 100 * ECONOMICS:USNFP / ( FRED:UNEMPLOY + ECONOMICS:USNFP ) estimates the percentage of previously unemployed individuals who transitioned to employment in the month. If enough jobs are created, the current FRED:UNEMPLOY should equal the previous month's FRED:UNEMPLOY minus ECONOMICS:USNFP , as the jobs created should correspond to the unemployed who found work.
When sufficient jobs are created, the number of unemployed decreases, and the ratio increases. A "healthy" value for this ratio is around 2.5% , indicating that approximately 2.5% of unemployed individuals transition to employment each month .
Conversely, if insufficient jobs are created, the number of unemployed rises, and the ratio decreases. Ratios around 0% or negative values are usually observed during or before recessions, indicating an unhealthy job market .
For last two consecutive months, the ratio has been 0.17% , suggesting an unhealthy job market . Similar patterns were observed before the DotCom and GFC recessions. If this trend continues for several months, it strongly suggests that the US is either on the verge of or already in a recession.
Historically, when the 30-week SMA crosses below the 50-week SMA, it signals a recession. This signal was triggered in June '24.
$USNFP -U.S Non-Farm Payrolls (MoM)$YSNFP (AUGUST/2024)
US Economy Adds Fewer Jobs Than Expected
source: U.S. Bureau of Labor Statistics
- The US economy created 142K jobs in August, more than downwardly revised 89K in July but below market expectations of 160K.
Most job gains occurred in construction and health care while manufacturing employment declined.
Meanwhile, the jobless rate edged lower to 4.2% from 4.3% in July.
U.S. Non Farm Payrolls U.S. Non Farm Payrolls
Rep: 353k ✅ MUCH HIGHER than Expected ✅
Exp: 187k
Prev: 333k
U.S. economy adds 353,000 jobs in January
Based on revised figures we have increased the jobs added to the U.S from 150k in Nov 2023 gradually increasing to 353k for the month of Jan 2024.
Build Back BetterBuild Back Better is a disaster for the economy. Banks are failing and Inflation is killing middle class America. The wealthy are above inflation rates in a top down economy where they receive their money before the full effect of inflation kicks in at the lower levels. "Trickle Down Economics".
Non Farm Payrolls are down again marking a decisive trend. Fewer jobs being created in the workforce along with flooding Illegal migrants along the border and you have a catastrophe that is just waiting to happen. A third world country in the making.
Is the US Economy Actually adding more jobs than expected?If you have been living under a rock for the past few days, unless you are not an economic savvy, the Bureau of Labor Statistics has released its newest Non-Farm Payrolls much above the expectation. The NFP rose by 263,000 last month, compared with an expected 200,000.
At first, my reaction was that the FED will have to keep raising interest rates, especially as the US dollar reacted to this news by jumping 0.8%. However, I was skeptical as to how NFP jobs increased but the unemployment rate remained steady at 3.7% in an economy that is starting to experience drawdowns from inflation. So I made a research to analyze exactly what is going on.
1. What is happening in the US labor market?
Today the NFP is at ~270,000 jobs, similar to mid-2018 when the labor market was defined as strong. It is much lower than the peak job creation in 2021 but 70,000 extra jobs compared to the expectation is a major difference.
2. What is happening with wage growth in the US labor market?
Wage growth has increased by 0.6% month-over-month. This is way too strong for the FED's target of 2% in inflation. But why is it so high? Well, one of the reasons is that the supply of labor is not coming back. The participation rate remains way below pre-pandemic levels, even when accounting for an aging population. So if labor participation is low, job creation must be low to slow inflation, yet, the labor market appears to be healthy.
Nonetheless, I wrote an analysis in October challenging the FED's data collection on job creation.
"Once consumers have reached their credit limit, they will most likely look for another job. “About 38% of American workers have looked for a second job, while an additional 14% plan to” (LA Time, 2022). This justifies the reasons for more job creation in the U.S. economy as emphasized by the Biden Administration and the Fed, however, it is mostly people looking for a second or third job."
Credit debt is increasing at an all-time high due to inflation. "U.S. households are spending $445 more every month due to inflation" (Lacurci G, 2022). So those who cannot keep up with their bills have to work more jobs or extra time.
This makes total sense, especially when the Household Job Survey shows no jobs added in the past 8 months, while the Establishment Survey shows 2.7 million jobs added, which is the one used by the FED.
Why such a large difference between the Household Job Survey and Establishment Survey?
The answer lies in how the different surveys are run.
For instance, the household survey counts people holding multiple jobs as one employed person. While the establishment survey counts all the jobs created, even if it is a second or third job. Based on the analysis I previously published, at least 700,000 Americans have had a second or third job in the last 12 months to make ends meet.
3. Where are jobs being created and lost?
Being created: leisure, government, education, and healthcare.
Being lost: goods, transportation, retail, construction, and utilities.
Conclusion:
The NFP survey is informing the market about Powell's next decision in December. The strong nominal wage growth and "strong" job creation argue there could be further rate hikes and hawkish talk from grandfather Powell. It is imminent before we will start to see weaknesses in the labor market. It is imperative to understand when will the turnover point of the labor market be and how bad to best position yourself, hence, we can start to see a FED pivot in early 2023 as the labor market weakens.
This is for personal recording but feel free to comment and argue.
NFP 261K is mid!
2016-2017 NFP Average = 168k (Trump Era)
2017-2018 NFP Average = 198k
2018-2019 NFP Average = 164k
2019-2020 NFP Average = -796k (COVID-19)
2020-2021 NFP Average = 474k (Biden Era)
2021-2022 NFP Average = 410k
There was a time when 261k would have been outstanding, but following on from the big job reset in 2019/2020 the average was above 400k.
non farm payroll recession trackerAll official recessions had negative NFP prints the US economy in 2022 is still far from seeing that
