Episode summary
Instant Reaction: Employers Unexpectedly Shed Jobs; Unemployment Rate Falls | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, Tom Keene, Damian Sassower · Guests: Claudia Sahm, Constance Hunter, Kristina Campmany, Andrew Hollenhorst, Stephanie Roth
Summary
US employers unexpectedly cut 23,000 jobs in July, while the prior two months were revised down by a combined 103,000, turning a report that had been expected to show 80,000 additions into a clear downside surprise. The unemployment rate still fell to 4.1%, but that improvement came alongside a lower labor force participation rate of 61.4% and slower wage growth, with average hourly earnings up just 0.1% month over month and 3.2% year over year.
The guests argued that the report is weaker than the headline unemployment rate suggests, even if some of the payroll drop may reflect seasonal noise, especially in education. Claudia Sahm said the soft wage reading matters most for the Fed because it shows labor market tightness is not pushing up inflation. Constance Hunter said the falling unemployment rate was driven by weaker participation and therefore was “not a robust labor market situation.”
The market reaction was immediate: front-end yields fell sharply and traders moved to price out a September rate hike. Stephanie Roth said the report supports the Fed staying on hold, while Andrew Hollenhorst emphasized that underlying job growth has slowed materially, with the three-month average dropping to 20,000. The discussion repeatedly returned to a split economy, with a low-hire, low-fire labor market that still looks uneven beneath the surface.
Key takeaways
- The July payrolls report shifted the debate because the three-month average job gain fell to 20,000, far below earlier readings.
- Claudia Sahm said soft wage growth is the key Fed takeaway because the labor market is not overheating and is not pushing inflation higher.
- Constance Hunter argued the lower unemployment rate was a bad sign because it came from weaker participation, not stronger hiring.
- Stephanie Roth said the report supports the Fed staying on hold, especially if next week’s CPI also comes in soft.
- Andrew Hollenhorst said the data justify emphasizing slower underlying job growth and make a September hike look unlikely.
Notable quotes
“I think the one thing that for the Fed that's maybe of most interest is wages coming in soft”
“This is exactly the opposite of overheating”
“this 20,000 over the last three months and then that fall in the unemployment rate that is not that is not a good look for the president”
“How can they possibly be hiking into this in an environment where inflation's likely also heading lower”
How the episode opens
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Bloomberg Audio Studios, podcasts, radio, news. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world. — And the July jobs report crossing the Bloomberg terminal right now. And it shows that the US economy actually lost 23,000 jobs in the month of July. This is a lot less than the 80,000 we were expecting to be added. We added 57,000 in the month of June. Moving to the unemployment rate, it dipped to 4.1% versus the prior month's 4.2%.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- labor market weakness
- nonfarm payrolls
- unemployment rate
- wage growth slowdown
- job hiring revisions
Companies and tickers mentioned
- IVZ
- C
- New Century Advisors
- EIU
- Invesco
- Citi
- Wolfe Research
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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