Jobs data is hawkish overall

The US non-farm payrolls number missed the market estimate, but the upward revision to the July report and the dip in unemployment added to speculation that rates will rise this month.

Banners at a jobs fair
Source: Bloomberg

The August report showed that 173,000 jobs were added compared with the estimates of 217,000. The July report was revised from 215,000 to 245,000, and the unemployment rate dropped from 5.3% to 5.1%; dealers were only anticipating a drop to 5.2%.

The market reacted the same way it always does; traders saw the headline figure and assumed a more dovish stance, but after closer inspection realised it strengthened the hawk’s argument. Let’s be clear, the numbers were not so great that a rate rise this month is a certainty, but it has made traders less certain of the rate change in the near future.

The US dollar is marginally higher after the announcement, and now that US unemployment is a whisker away from full employment (which is 5%) additional gains are on the cards.

Stock markets jumped initially, and then the realisation of positive jobs data kicked in, and they are now firmly lower. Gold, like stocks, jumped for joy at the slight of the headline figure, but now the yellow metal has given up its gains and is heading south. 

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