What’s going on?

The US added just 235,000 new jobs in August – far fewer than even economists’ lowest forecast of 400,000

What does this mean?

• There might be two mitigating factors:
  • The survey was taken in mid-August, when Delta variant fears were probably at their highest. Managers might’ve paused hiring to manage a demand slowdown, and potential employees might’ve been holding off job offers to keep themselves safe.
  • Wage grew ahead of expectations, though that was mostly because high-paying jobs were being filled (rather than those in the retail and hospitality and leisure sectors, where hiring stayed flat or declined).
• Between those two factors, most economists reckon August’s jobs report was just a coronavirus-driven censor.

Why should I care?

The bigger picture: This is what stocks are coming for

• The Fed has previously said that August’s jobs data would influence its strategy for reducing its economic support (namely its bond-buying). But given how far short the number is, the central bank isn’t expected to announce any major changes in Septmeber.
• Instead, it’ll probably wait until November at the earliest to see if August was a one-off. This stay of execution should benefit stock prices in the short term (read why here).

Zooming out: Demand might already have disappeared

As Europe has got a stronger handle on the pandemic than the US, economists are expecting the ECB to start rolling back its economic support in later 2021 too. That could put it on a similar timeline to the Fed, and show that major central banks are synchronized in their pandemic recoveries the same as they were in their collapses.

Content source: Finimize (2021) Oh Sh*t. Available at: https://www.finimize.com/wp/news/oh-sht/ [Accessed on Sep 4, 2021]