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Tuesday, September 6, 2011

US: Uninspiring Data, Not Recessionary (OSK)

The Aug employment report on Friday, at least on a headline-basis, sparked another wave of concern surrounding the state of the US economy. Specifically, overall non-farm payrolls were flat on its back, with continued net shedding in government employment of 17k offsetting lackluster net hiring by the same amount in the private sector (there were also net downward revisions of 58k in the prior two months, primarily in government). But the softness in private payrolls was also partially magnified by the Verizon strike, which temporarily removed around 45k jobs from the telecommunications sub-sector. In the absence of the strike, the near-term trend in private payrolls would have been roughly 100k through Aug, still a downshift from more than 150k over the prior three to six months. But our calculations also suggest that the recent moderation in private hiring might have been less widely diffused or more narrowly confined to some industries. If so, this could lessen the risk that the soft payroll prints of late have become more entrenched. Nevertheless, while employment growth has been undeniably sluggish, unable to meaningfully dent the unemployment rate, it is still inconsistent with an imminent business cycle recession at this time.

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