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Daily State Of The Markets: Goldilocks Looks To Be Alive And Well

David Moenning profile picture
David Moenning


  • The headlines announced that Friday's jobs report was a "miss."
  • Stocks rallied anyway.
  • Why? Because Wages/Inflation remain in check.

The headlines blared that the July's Jobs Report was a "miss." This was due to the fact that, according to the Labor Department, the economy created 157,000 new jobs last month, which was below the consensus estimate of 190,000. As such, the bears gasped loudly and proclaimed that the economy must be rolling over.

However, after digging into the report, my response to the nattering nabobs of negativism is, "Uh, not exactly."

First off, we need to recognize that the monthly job totals are almost always revised the following month (you know, when the actual numbers are in). For example, June's new job creation total was revised upward to 248K from 218K while May's total moved up by 24K. This means that the economy actually created 59,000 more jobs than were originally reported in the prior two months alone. So, the optimist in me says that if you add 59K to 157K you get 216K new jobs, which would have been a "beat."

Oh, and the average job creation total over the last 3 months currently stands at 224K. Not bad for an economy that is supposed to be running out of workers.

The Unemployment Rate fell to 3.9%, although why the Labor Department doesn't break that number out a few more decimal places in this day and age is beyond me.

The Most Interesting Part Of The Report

For me, the most interesting aspect of the Nonfarm Payroll report was the all-important wages component. To review, this is now a closely watched area due to the impact wages have on inflation. And with everyone on the planet calling for higher inflation, well...

For the month, average hourly earnings rose by 7 cents, or 0.3%. On a year-over-year comparison basis, wages rose by 2.7%. Insert second gasp here, because this is above the critical 2% level that

This article was written by

David Moenning profile picture
David Moenning is founder and Chief Investment Officer at Heritage Capital Research, a Registered Investment Advisor. Heritage is an independent, privately owned, investment management firm located in the Denver area. Mr. Moenning has more than 33 years of portfolio management experience and focuses on a risk-managed approach to capital markets via modernized portfolio development and dynamic adaptation to ever-changing macro environments. Most recently Chief Investment Officer for a $1.3 billion RIA firm.

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