Labour

All eyes on the data, is a phrase that is thrown around a fair deal. Trust the data. Numbers purporting to distil the vast goings on in the global economy drive global capital flows by changes of the finest order. A nought point one here, a couple of thousand there, can shift sentiment, firing up bulls and bears alike. One of the most celebrated bits of data that hits the tape, is the monthly jobs report, often cutting short a Friday lunch on occasions of boom-boom excitement. Now, it is widely reported that the jobs market is currently super tight. More jobs going than those who want them. And wages are being chased higher as a result, as fired-up Unions whisper quietly in the ears of workers, that the regime has shifted. Labour, not capital, now holds the aces. Or maybe not. Last week the Bureau of Labour Statistics quietly slipped out a report in the shadow of Microsoft and Tesla’s earnings, that showed the jobs market may not be as strong a widely believed. Indeed, there have been warnings. Last month the esteemed Philadelphia Federal Reserve published a note calling out the BLS, suggesting that the data for Q2 2022 had been overstated. And not overstated by a bit, overstated by magnificently wide-of-the-mark one million jobs. One million. All told a somewhat provocative suggestion given the prevailing narrative of an uber-tight market; and a narrative that the Federal Reserve frequently leans on to justify its super-sized rate hikes. Hmm. So with the ball deep in the back-hand court, the Bureau of Labour shuffled its papers and re-ran the model with all the fresh bits of information that have subsequently come in. For those who got to TABLE A, ‘Three-month private sector gross job gains and losses seasonally adjusted’ of the report, there it was. Cold as day. The Philly Fed was on the money, as it showed that the net gain was not a net gain of one million plus jobs at all, but actually a net loss, and a loss to the tune of almost three hundred thousand jobs. So given what was reported back in June 2022, add up all the whoopsies, and it appears that the unemployment rate last summer was actually almost 1% higher than widely reported. Go figure. Maybe it’s a one off, maybe the BIS just had a bad day but in the context of the Fed’s admission last year that they don’t really understand inflation much at all, it now appears the data they look at may not be that accurate. What a stew. In the meantime, treat any mainstream narratives with care.