Jobs Data Good, but Good Enough?

The 172k rise in July private sector payrolls was well above the consensus forecasts and the best showing in 5 months. Hourly earnings rose 0.1% and the work week was unchanged. After a string of disappointing news this is surely, welcome, but it may not be sufficient to allay concerns at the Fed.

The three month moving average increased from 91k to 120k, but this is still lackluster. As recently as April the 3-month average was 162k and at the end of last year it stood at 183k. The unemployment rate ticked up to 8.3% from 8.2% (largely a rounding adjustment) as the household survey showed 195k job losses after a 126k increase in June.

Manufacturing added 25k jobs, the best in four months and this bodes will for industrial production, which may also be flattered by the unusually hot weather. Construction added 1k jobs, which give not insight into construction spending. Private service providers added 148k jobs the best in five months.

The dollar initially bounced on the news but then reversed to come off quickly. The major foreign currencies appear poised to test the highs again, though we still favor the greenback for anything but very short term. The main exception is the yen, against which the dollar rose to new highs for the week, just shy of JPY78.70.