Retail sales disappointed in July and I think we may be in for another disappointment for August. Expectations have retail sales rise by 0.4% while retail sales excluding autos are called higher by 0.3%. While consumers in the US are well known to spend money they don’t have I think that August will deliver back-to-back disappointments and the US Dollar may continue to reverse from its strong rally. I have been bearish on the USD since last week before the NFP disappointment was released and currently see no reason to change.
In the short term I agree with you, in the longer term I am holding my EUR/USD short position open and looking to add to it. Although the NFP was softer than expected I feel like the US economy is still adding jobs, and one take away from Fridays report was the fact that we seem to be adding higher quality jobs.
Softer than expected is one way to put, we added less than half if you add revisions. Just about every NFP report in 2014 showed high quality jobs being replaced with short-term jobs or low paying jobs. The labor force is contracting while the population grows. 114K jobs added in August means we added about 50K new unemployed people to our army of unemployed as we have over 150K new people entering the labor force every month.
While I turned a Euro bear I am extremely bearish on the USD and the house of cards will crumble down sooner rather than later. The US labor market is in much worse shape than the spin the media will have you believe.
I think it was 142k not 114k. With downward revisions over the past two months at a 28k total. Don’t know what you mean by less than half. I agree that “Just about every NFP report in 2014 showed high quality jobs being replaced with short-term jobs or low paying jobs.” But this time, at least the way I read it, seems a bit more up beat.
Read more: 301 Moved Permanently
The longer term unemployed are going back to work, [The number of long-term unemployed (those jobless for 27 weeks or more) declined by 192,000, and “Job gains occurred in professional and business services and in health care.”]
Where as the participation rate was actually down a tenth. (Granted prior to this report was up 4 tenths YoY) As far as employment goes I think the US is on the right track, maybe not the fast track, but the right track.
If this house of cards, that the spin media loves so much, is going to crumble. I feel it will be on the back of low inflation or a high level of debt, not employment numbers. I guess the real question I would ask my self “if not the dollar what currency do you sell it against?”
142K - 28K = 114K and that is the number you should look at. Labor force participation is terrible and one report with gains in higher paying jobs does not make a trend. Too much was lost and this report in my opinion was terrible. Less than half of expectations as in 229K was expected and we came in at 114K. This report shows that the US economy added to its army of unemployed as more than 150K new legible workers enter the labor force every month and we can’t even absorb that.
You may view it as a positive which is fine and we can agree to disagree about this.