September 4, 2020 Headlines

Treasury yields are higher and steeper following the release of an encouraging jobs report for August. S&P 500 futures were negative ahead of the report but have now turned positive ahead of the open. Nonfarm payrolls added 1.371 million jobs in August, slightly above expectations, but the big headline item was the decline in the unemployment rate to 8.4% (9.8% expected), down from 10.2% the prior month. The unemployment rate decline was for the right reasons as well, including increases in both household employment (+3.7 million) and the official labor force (+1 million). The wage data was also positive. Average hourly earnings were up 0.4% month over month (+0% expected), and the average work week increased to 34.6 hours.

We’ve now recovered roughly half of the job losses from the pandemic, which is sooner than many economists expected (including Fed forecasts).  At the same time, there is still a lot of noise in the data in this environment, and there is some concern that the September jobs report may give back some of this positive momentum considering the lack of additional fiscal aid from Congress, including extinguished PPP funds.

Jason Haley
Chief Investment Officer

9/4/20Two-Month Payroll Net Revision-39k
9/4/20Change in Nonfarm Payrolls1350k1371k1763k1734k
9/4/20Change in Private Payrolls1325k1027k1462k1481k
9/4/20Change in Manufact. Payrolls65k29k26k41k
9/4/20Unemployment Rate9.80%8.40%10.20%
9/4/20Average Hourly Earnings MoM0.00%0.40%0.20%0.10%
9/4/20Average Hourly Earnings YoY4.50%4.70%4.80%4.70%
9/4/20Average Weekly Hours All Employees34.534.634.5
9/4/20Labor Force Participation Rate61.80%61.70%61.40%
9/4/20Underemployment Rate14.20%16.50%



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