On Friday Eastern Time, a shocking US non farm payroll report for July triggered a "tsunami" in the US stock market and sparked intense discussions on expectations of a possible rate cut by the Federal Reserve next month.
From the overall data, this report can be described as "thunderous everywhere": the seasonally adjusted non farm payroll in the United States recorded 114000 people in July, the smallest increase since April 2024, far below the expected 175000 people. Meanwhile, the unemployment rate in the United States unexpectedly rose to 4.3% in July, reaching a post pandemic high, while private sector recruitment slowed to its lowest level in 16 months.
The non farm payroll report released by the US Bureau of Labor Statistics has clearly increased market concerns about the actual state of the US economy.
However, despite this, from some segmented data, more truths buried behind the poor employment numbers can still be uncovered from this report. And among them, there are four details that the market should breathe a sigh of relief, understanding that this report may not necessarily mean that the end of the US economy is coming.
Is it all caused by hurricanes?
Around the early morning of July 8th local time, Hurricane Beryl made landfall in Texas, USA as a Category 1 hurricane. This hurricane is the strongest hurricane of its time since records began in 1851, and also the global 'wind king' of 2024 so far
Although the hurricane began to weaken the day after making landfall in the United States, its impact lasted for several days. About 2.7 million households and businesses in the Houston area of the United States experienced power outages for several days, and even ten days after the hurricane made landfall, tens of thousands of customers in Texas still had incomplete power supply restored.
Although a large footnote was added on the first page of the non farm payroll report released by the US Bureau of Labor Statistics, stating that Hurricane Belle had "no significant impact" on this month's data, many economists do not agree with this.
In fact, just by looking at the number of workers who did not go to work due to adverse weather conditions reported by the US Bureau of Labor Statistics, one can refute their own claims.
According to the report, in July of this year, 436000 non-agricultural workers and 461000 agricultural workers were unable to work due to severe weather conditions. This data not only sets a record for July, but also is more than 10 times the average level for July in previous years since the Bureau of Labor Statistics began tracking this indicator in 1976.
In addition, over one million people were forced to work part-time due to weather conditions, setting a record for the highest July data in history.
Jefferies US analyst Thomas Simons wrote:; quot; We cannot confirm that Belle is not responsible for the weakness of this data& amp;quot;
Temporary layoffs have significantly increased
In addition, the number of unemployed people who stated that "unemployment is only a temporary situation" in July this year was the highest in the past three years, accounting for more than half of the total number of unemployed people (352000).
The significant increase in temporary unemployment is also closely related to Hurricane Belle.
We believe that some of these layoffs may be related to Hurricane Belle, "Nancy Vanden Houten, Chief US Economist at Oxford Economics, wrote in an analysis article.
Economists predict that if the unemployment status of these temporary unemployed individuals only lasts for a few weeks, most of them are expected to be hired in August or September, which means that employment data for the next two months will significantly improve.
Employment in the construction industry remains active
The number of employed people in the construction industry is usually a leading indicator of economic changes, especially for industries such as residential construction.
In July of this year, the employment data of the US construction industry continued to grow at a stable rate: the US construction industry added 25000 new jobs in July, slightly higher than the average monthly increase of about 20000 construction industry jobs in the five years before the epidemic.
This may indicate a recovery from months of sluggish housing starts in the United States, and also suggest that the overall economic situation may not be as pessimistic as the overall employment figures suggest.
The employment rate of middle-aged workers remains high
Economists closely monitor the so-called 'middle-aged workers' - those aged between 25 and 54- as they make up a significant portion of the US workforce.
Despite the poor overall employment data in July, the employment rate of these middle-aged populations remains very strong.
In July of this year, the participation rate of middle-aged labor force rose to 84%, the highest level since 2001.
For middle-aged men, this proportion has risen to 90%, a new high since the 2007-2009 financial crisis.
For middle-aged women, this proportion is 78.1%, which is the same as the historical high set in May this year.