Instant Reaction: Employers Unexpectedly Shed Jobs; Unemployment Rate Falls

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This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.

**Alexis** (0:19)
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%. The expectation was for 4.2%. Labor force participation rate coming in at 61.4%.
The month before, it was 61.5%, and that's a bit lower than the expectation. Want to move over to the wage component here, which provides more clues on inflation. Average hourly earnings month over month, up just a tenth of a percent, a scant tenth of a percent. Average hourly earnings year over year, up 3.2%. The expectation was for 3.5%. So again, a big surprise to the downside, the economy losing 23,000 jobs in the month of July. The expectation was for an addition of 80,000. I want to take a quick look at how the market is reacting here. Looks like futures guys, at least for the moment, hanging on to those earlier gains. Back over to you.

**Tom Keene** (1:31)
Alexis, thank you so much. The markets move, as you can imagine. Equities lift here, thinking free money will be out there in a lower rate environment. The yield space is the most elastic, and you see it in the two-year yield in a solid nine basis points, 4.16%. Basically, half way back to that coveted 3.99. 30-year bond doesn't come in as much as you'd expect, but nevertheless, from a 5.22 into 5.19%.
Damian, your thoughts on the set of numbers here, the revisions, extraordinary.

**Damian Sassower** (2:04)
Yeah, yeah, no, I mean, exactly. We have a revised down from the last print to 20,000 from 57, and this negative 23 print, you would think, would get some people's attention. But to Alexis' point, it looks like equities are kind of looking through it for the minute. And I don't want to call this a nothing burger by any stretch. I mean, Claudia, I mean, you know, this, this, I wonder if it's going to move markets.

**Tom Keene** (2:23)
Well, we'll have to see here. Claudia Sahm, we're letting her digest the data here a little bit. I do want to say with the ECO screen that we have at Bloomberg, the change in non-farm payrolls was negative 23 versus a survey of 80 Some people were there, but the two month payroll adjustment and negative 103, that's a combined negative 126
I think we've given her enough time. Claudia Sahm joins us here to provide perspective. Claudia, this must change the debate at the Fed.

**Claudia Sahm** (2:59)
So first, does this remind you of anything? I mean, a year ago, exactly this employment report was when we had the very large downward revision, the downside surprise, the downward revisions, and the BLS commissioner lost her job. Right, so now, just looking quickly, and I can't do all the details of this, government education, government education was a big decline, and one of the things that happens in the summer, it can be really tough with the school calendars, and if things slip a little bit with the seasonal adjustment, you can get some kind of squirrely numbers in terms of the education. That certainly is at play for the downside missed today. That was something that was very clear in last year's numbers as well. So I don't want to dismiss this, and of course that was a shift from we'd had a strong labor market to like whoa, maybe it's not so strong. So I do think there is signal here, there's probably a fair bit of noise and some seasonal issues that will look through. The unemployment rate did tick down.
I think the one thing that for the Fed that may be of most interest is wages coming in soft.

**Tom Keene** (4:01)
I'm getting out my HP12C calculator because Constance Hunter, I wouldn't do this for Claudia, but Constance Hunter jumped in, here's what we're going to do. Can we do this in the control room? Can we rip up the script and have Claudia and Constance together?
Did you check with their people and they say it's okay? Constance Hunter getting wired up right now, getting folks futures up 32, the advanced NASDAQ lifts double up 8 tenths of a percent here, and the yield again, the two-year yield is the most elastic in at a 4.16 percent. Damian, ask a smart question to Dr. Sahm. Well, I figure out the three months moving average on my HP 12C.