The U.S. Non-Farm Payroll report signaled that the recession may be over as the pace of job losses slowed to -247,000 in July which was the least since August 2008. It significantly beat expectations of -325,000 and helped lower the unemployment rate to 9.4% from 9.5% which should ease fears that it could reach as high as 10.0 % by the end of the year.
We also saw the prior month’s loss of 467,000 revised to 443,000 adding to the evidence that companies have slowed the pace of layoffs and could soon return to hiring. Manufacturing jobs declined by 52,000 which was nearly half the expected 100,000 as the sector has found support from increasing foreign demand on the back of the weak dollar and an improving global economy. One of the only sectors to see deterioration was retail trade as consumers continue to tighten their wallets, but a return to hiring in the broader economy could lift domestic demand which should be the catalyst for a sustained recovery. A 0.2% rise in hourly earnings could be a sign that demand for workers is improving, but it will also raise concerns over inflation. Those fears were evident in the subsequent price action as the dollar found support on the prospect of increasing interest rates. The Fed has been very clear that they will remove liquidity from the market as the
