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We’ve beaten the drum repeatedly on the TREND slope of improvement in the labor market and the associated investing implication this week (links to those notes below) so we’ll keep it to the data here.  The short of today’s Employment release is that it's largely un-impactful to our positive intermediate term growth outlook for the domestic economy.   

We went to net neutral in our Real Time Alerts into yesterday afternoon’s advance, net short this morning, and would be selectively looking to add back long exposure on weakness, provided the $USD holds support.   

Given the general strength of the macro data thus far in July (Claims, ISM, PMI), we expect equity weakness to be met with a bid as we pullback towards immediate term support at $1690 on the SPX.

As summary review of this morning's Employment data:

NFP: Net Non-Farm Payrolls gains declined sequentially to 162K, but held flat on a YoY growth basis at +1.7% and accelerated +30bps on a 2Y basis.  

NFP Revision:  The net two month revision was -26K with May revised from +195K to +176K and June revised from +195K to +188K.  

Household Survey:  Net employment gains as measured by the Household Survey improved to +227K from +160K in June.   

Employment by Age:  All Age demographics saw accelerating employment growth in July.

Unemployment Rate:  The Unemployment Rate dropped to 7.4% from 7.6% as the total labor force registered a net decline alongside an increase of +263K in Total Unemployed and an increase of +227K in Total Employed. 

Labor Force Participation:  A positive change in the working age population alongside a net decline in the labor force pushed the Labor Force Participation Rate down to 63.40% from 63.46%.

State & Local Gov’t Employment:  State & Local Government Employment (14% of total workforce) accelerated from 0.03% to 0.10%, marking the 3rd consecutive month of positive employment growth with May marking the first month of positive growth since June of 2009.

Part-time/Temp Employment:  Temp employment increases by 8K MoM with YoY growth decelerating 40bps sequentially.  Part-time employment increased 174K MoM (77% of the total 227K gain as estimated by the household survey)  with YoY Growth accelerating 50bps sequentially.  

Industry Employment:  Retail, Business Services and Leisure the leaders this month at +47K, +36K, +23K, respectively.  Construction losing 6K on the month. 

Ave Weekly Hours for Private Employees:  Hours declined to 34.4 from 34.5 MoM and were flat vs. year ago levels. 

Please see this week’s notes for more detailed analysis and strategy discussion: 


Enjoy the Weekend.  

July Employment - Not a Catalyst - Employment Summary Table

July Employment - Not a Catalyst - Claims 080113

July Employment - Not a Catalyst - CPS vs CES

July Employment - Not a Catalyst - CES vs CPS MoM

July Employment - Not a Catalyst - Unemployment Rate

July Employment - Not a Catalyst - Employment by Age

Christian B. Drake

Senior Analyst