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from Data Dive:

July jobs report: Stagnant wages

It’s Jobs Friday! This morning, the Bureau of Labor Statistics released data for non-farm payrolls for the month of July. The economy created 209,000 jobs last month and the unemployment rate ticked up to 6.2%. The headline number came in a bit under consensus (a Reuters poll of economists expected growth of 233,000), but was overall not a terrible number. The data today really preserves the status quo.

The Reuters Graphics team has recently debuted some really great jobs-related interactive charts. Here are some highlights:

Reuters

There are a number of labor market indicators in this interactive, but wage growth is one of the data points that Fed chair Janet Yellen cares about most. Average hourly earnings grew by a single penny in July (to $24.45), and have grown just 2 percent over the past 12 months. This suggests that even though unemployment is coming down, the labor market is still weak. Theoretically, if there was healthy competition in the job market, companies would be offering higher wages, and we aren’t seeing that yet.

Reuters
This chart has a lot going on, but that orange line, which has been going up pretty consistently since 2008, are the number of people who aren’t in the labor force in the U.S. Generally, an upward trend was to be expected as the Baby Boomers started to retire, but there’s still plenty of people in there that aren’t looking for jobs because they are discouraged and have dropped out of the labor market. The green line is the number of unemployed. It’s slowly but steadily coming down (although that’s a mix of people getting jobs and people dropping out of the labor force). The black line is number of jobs in the economy. We’re barely, barely ahead of where we were more than six years ago.

from Counterparties:

MORNING BID – The economic state of things

The jobs report takes a bit of heat off of Thursday’s selloff, which was predicated in part on some nonsense out of Europe and more importantly some kind of growing consensus that the economy is getting hot enough that it might force the Federal Reserve to start raising rates a bit earlier than expected, given a sharp and unexpected rise in the employment cost index on Thursday. And while it’s fair to suggest the stock market has gotten a bit ahead of itself when the Fed is rapidly moving toward the end of its stimulus policies, it’s also possible that stocks have gotten ahead of themselves for a far more prosaic reason – the economy isn’t strong enough to support the kind of valuations we’re seeing in equities right now.

That’s not to say we’ve got bubbles all over the place in stocks – they’re pretty few and far between – but credit standards in various places have loosened, and if the Fed starts raising rates we’re going to see a pretty quick reversal of that before long. There are significant signs of concern emerging in places like the high yield market, which has dropped off sharply in recent days, particularly among the weakest credits, and the housing and auto markets, which are better leading indicators than the jobs data, also suggest that the slack credit standards may end up hitting a wall before long.

from The Great Debate:

$18 billion in job training = lots of trained unemployed people

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President Barack Obama told Americans in his July 19 weekly address that every worker deserves to know that “if you lose your job, your country will help you train for an even better one.” A nice sentiment -- and politically safe. It's just the wrong answer. Those “better jobs” don't exist, and training doesn’t create jobs. Despite all that, every year the U.S. government spends billions of dollars on job training, with little impact.

In 2007, then-candidate Obama visited Janesville, Wis., location of the oldest operating General Motors plant in America. Echoing his current promise to support unemployed Americans through job training, Obama proclaimed, “I believe that, if our government is there to support you, this plant will be here for another hundred years.” However, two days before Christmas and just about a month before Obama’s inauguration, the plant stopped production of SUVs, which made up the bulk of what was built there, throwing 5,000 people out of work. This devastated the town, because most residents either worked in the plant or in a business that depended on people working in the plant. Congress paid for a $2-million retraining program, using state community colleges the way the government once used trade schools, a century ago, to teach new immigrants the skills they needed to work at GM.

from Counterparties:

MORNING BID – What’s all the Yellen about?

Rants from TV commentators aside, the market’s going to be keenly focused on Janet Yellen’s congressional testimony today, with a specific eye toward whether the Fed chair moderates her concerns about joblessness, under-employment and the overall dynamism of the labor force that has been left somewhat wanting in this recovery. The June jobs report, where payrolls grew by 288,000, was welcome news even as the economy continues to suffer due to low labor-force participation and weak wage growth.

Inflation figures are starting to show some sense of firming in various areas, for sure, but still not at a point that argues for a sharp move in Fed rates just yet. Overall, a look at Eurodollar futures still suggests the market sees a gradual, very slow uptick in overall rates – the current difference between the June 2015 futures and June 2016 futures are less than a full percentage point – not as low as it was in May of this year, but still lower than peaks seen in March and April 2014 and in the third quarter of 2013, before a run of weak economic figures and comments from Fed officials themselves scared people again into thinking that the markets would never end up seeing another rate hike, like, ever again.

from Counterparties:

Thirsty for work [Updated]

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Last week’s jobs report may have capped off the best six-month period since the recovery began, but the long-term unemployment situation is as terrible as ever. Nearly3.1 million Americans have been out of work for six months or longer — a third of all unemployed Americans. This isn’t just a bad business cycle, says Nick Bunker. It has become structural problem in the labor market* (see update below). The Beveridge Curve, which tracks the relationship between the unemployment rate and job vacancies, has shifted outward, meaning there are lots of job vacancies, but more unemployed people than you would have expected had the pre-recession trend continued. There are plenty of jobs out there, Bunker says. Employers just aren’t hiring people to do them.

Catherine Rampell points to new data from NBER and Chicago Fed researchers showing that the average job opening is going unfilled for an average of 25.1 days, the longest vacancy rate since May 2001. She’s got a number of ideas on why this is happening, but she’s convinced that the one thing that’s not causing it is job seekers lacking the skills that employers want. If this were about the skills gap, she says, employers competing for a small pool of skilled applicants would be forced to raise wages — something we haven’t seen recently.

from Counterparties:

MORNING BID – Minute by minutes

The bond market remains pretty much tethered to the 2.50 percent to 2.60 percent range that's prevailed for the 10-year note for quite some time now, with the primary catalyst being today's release of the Federal Reserve's minutes from its most recent meeting. The relevant data that investors are probably paying most attention to - the jobs report last week, the JOLTS jobs survey, shows some more things that is meant to keep the Fed engaged rather than moving toward an imminent increase in rates. The quit rate - the rate at which people leave jobs for others - is still historically a bit on the low side, not at a level that would make the Fed more comfortable that the kind of labor-market dynamism needed for the Fed to shift to raising interest rates. Fact is, the central bank just isn't there yet.

And with that in mind, that means those investors clamoring for higher rates are probably going to continue to see their expectations unmet for a longer period of time, and with sovereign buyers from Europe and Japan wandering outside those halls, there's an ongoing bid in the market that continues to thwart short-sellers who are just waiting for that right moment to bet against the bond market. That's been a lonely trade of late - or rather, a popular trade, just a big loser as trades go.

from Data Dive:

Did start-ups hold back the recovery?

When you say the word start-up, many people think of the wild proliferation of tech companies in Silicon Valley: Stanford grads sitting in a basement with their friends being offered obscene amounts of money for a mobile app that simply sends a one-word message to a user’s contacts. But economically speaking, a startup is any business that’s less than five years old and has fewer than 20 employees. And, tech bubble or not, start-ups in general have not done so well in the wake of the Great Recession.

A new research note out from the San Francisco Fed concludes that “low growth among start-ups at the beginning of the current recovery may have contributed to slow employment growth overall.”

from MacroScope:

Key to UK interest rate hike, pay data, still a muddle

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Bank of England rate setters meeting this week should be in cordial agreement that Britain's economy is growing at a decent pace, and that price pressures look mostly in check at the moment.

But when it comes to gauging how quickly slack in the labour market is disappearing – a key question deciding when they should raise interest rates – the surveys look a lot less joined-up.

from Data Dive:

Today’s jobs report in charts

Non-farm payrolls for June were released Thursday, and by most accounts this was a great month for job growth. The economy added 288,000 jobs, way more than the 215,000 that were expected. Reuters has a full live blog of the commentary that came out after the report. Here are some of the best charts from the blog:

growth-by-industry-june14

Almost every industry expanded this month, and many were at the high end of the range of monthly changes over the last four years.

from Data Dive:

Here’s why it’s so hard to land a job

Six years into the recovery, the American jobs situation is still in a rut. The relationship between how many people are looking for a job (the unemployment rate) and how many jobs are available (the jobs opening rate) has historically been predictable. Plotting it out in chart form gives you what is known as the Beveridge Curve, named after the British economist William Beveridge. The idea is that as the number of workers who are looking for a job rises — which to employers means the pool of talent for them to hire from gets bigger — the available jobs get filled and the opening rate goes down.

This is what it has looked like since 2001:

The Beveridge Curve

The first thing to notice is that something happened in 2008: the Beveridge Curve shifted to the right and stayed that way. That means employers aren’t hiring as many unemployed people as they should be, according to a pre-2008 view of the world. It is also one of the reasons the economy feels like it is still bad, even though the recession officially ended five years ago.

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