Reflecting Delta’s concerns, in August, the most significant slowdown in hiring in the last 7 months was observed, and in this context, we got an NFP of 235K, well below the expectation of 733K. The data for July was revised upwards to reach 1.05 million. Average monthly NFP growth is 586K in 8 months. While the private sector added 243K jobs, well below the 610K expectation, the unemployment rate fell to the best levels in the pandemic period, with 5.2%. There is a significant drop from highs at the end of the February-April 2020 recession; in terms of both the unemployment rate and the number of unemployed. The downshift seen in the data, as first seen, complicates the possible decision of the Fed to start reducing monetary support in the coming months; In fact, there are some details that prevent the interpretation of this foresight as it was first seen: Wages and its contribution to inflation.
The employment slowdown is largely due to the inability to fill contact jobs due to Delta concerns. Therefore, there is a situation arising from the job positions that these people are normally expected to fill, who are unable to work due to the pandemic. Now; There are effects of individuals being slower to return to work and, on the other hand, causing businesses to be hesitant about hiring. The participation rate remained unchanged at 61.7%, that is, there was no marginal contribution compared to last month. For example; unemployment benefits are helping individuals who are hesitant to enter the workforce with the Covid-19 virus swirling around, but they would probably be in the workforce if they didn’t have an income. Businesses, on the other hand, are hesitant because of concerns about increased infections in face-to-face hiring and fears of a reduction in turnover if the economy slows down enough to reduce demand for goods and services. Concerns of infection are also delaying their return to the office. The online working environment is more comfortable, and there are reservations in on-site work from both workers and businesses.
NFP is at its lowest level since January, while unemployment is at its lowest since the pandemic. (Source: Bloomberg, Bureau of Labor Statistics
Wages increased by 0.6% month-on-month and 4.3% year-on-year, confirming the double interaction of feeding inflation. Wage inflation is high and confusing as to the increasing role of demand inflation… It also indicates that highly qualified positions are being filled. Since the majority of such jobs also allow remote work, low employment growth seems to have come together with high wage increases. Of course, it also represents an important demand effect in terms of economic power. In other words, it is a reflection of the distribution of wealth in the eyes of the employees… Purchasing power is naturally high.
If we look at the sub-items; Significant job gains occurred in professional and business services, transport and warehousing, private education, manufacturing and other services in August. Retail trade, construction, government and healthcare employment declined last month. Employment in the entertainment and hospitality industry fell by 42K in restaurants and bars in August. Employment in professional and business services rose 74K in August. Employment increased in architecture and engineering services (+19K), computer systems design and related services (+10K), scientific research and development services (+7K), and office administrative services (+6K). Transportation and warehousing added 53K jobs in August, bringing employment in the industry slightly above the pre-pandemic level in February 2020. In August, employment increased by 40K in private education, while there was a decrease in education employment in state and local governments. August marks the start of the traditional back-to-school season. However, recent employment changes are difficult to interpret, as pandemic-related staff fluctuations in public and private education disrupt normal seasonal hiring and firing patterns. There may also be uncertainty about face-to-face education due to the delta variant.
We have encountered a body of data that is confusing about tapering, but does not clearly say “tapering does not come”. The Fed may see the causes and effects of the employment slowdown as temporary. On the other hand, the “tapering timing” of the Central bank’s approach to the issue makes it difficult to predict. They will have to abstain from their predictions of easing conditions due to the Delta variant a bit more. On the other hand, there is a situation in which the net is in an improvement position in terms of continuing the progress towards maximum employment. It’s not worsening, it’s slowing down.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
