Payrolls give good signals for now, the rest seems uncertain

Payrolls in the USA, which is expected to increase by 1.4 million in August, increased by 1.37 million, close to the expectations, while unemployment, which was expected to decrease to 9.8%, decreased to 8.4%. The most positive details are the decline in the unemployment rate and the participation rate increasing to 61.7%. In the private sector, contrary to what the ADP shows, there is a new increase of over 1 million. The fact that we highlight the private sector so much in the public-private sector distinction is that a significant portion of employment in the public sector is temporary since we are before the election. Although the latest data before autumn gives good signals about the labor market, what is important is how future uncertainties will reflect on the recruitment side.

Average hourly earnings remain high, although they continue to normalize, as there is still a very important deficit in returns to work and those that are left inside are generally management levels. Workers who will lose income and return to work with the cessation of unemployment benefits can increase the weight of low-wage employment. Autumn is an important period of uncertainty; Since factors such as pandemic and election will affect decisions such as investment and recruitment, this momentum can be expected to cool. We are getting some signals in employment sub-items in ISM indices. There are still news and postings of mass layoffs from some major companies. Some companies also seem to have brought their digitalization and automation plans forward due to the pandemic. The fact that we are far from the exit point from the pandemic causes the road to full employment to be long.

Within the framework of the fact that the single data are not an evaluation criterion for the Fed, we can say "there is no new information" since the unemployment rate is far from the level that will lead the Fed to tighten. The Fed will also look to improve employment qualitatively, so returning to low-wage work doesn't make sense at this stage either. In the process that begins with Powell's speech, the dynamics we will evaluate will be different from what the Fed did during the recovery period from the previous crisis.

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