Despite a headline number that Wall Street cheered, the Jobs Report was not necessarily good news. Inside the report, there was a vast difference in the “household” survey data versus the “establishment” survey data.
The household numbers showed a decline in jobs of 315,000 jobs, while the establishment numbers showed an increase of 372,000 (headline). The Challenger Job Cuts report, released on Thursday of last week, seem to support the "household" data. Job Cuts increased for the 3rd time in the last 4 months and hit a high of 32,500 not seen since March of 2021. Another concern inside the Jobs report showed that while full time and part-time workers declined in the household data, “multiple” jobholders increased by 239,000. This would indicate people are struggling to make ends meet. In fact, according to Goldman Sach's Housing Affordability Index, home prices have reached the least affordable for purchasers on record. This does not bode well for corporate earnings if consumers are forced into cutting expenses.
This week we’ll get the numbers on Consumer Prices and Producer prices.
The Jobs Report showed average household earnings declined year-over-year from +5.3% to +5.1%. If June’s CPI comes in as expected, the gap between earnings and inflation will have widened for the 4th time in the last 5 months. Corporate earnings season is upon us and the consensus is that earnings are likely to disappoint overall. In fact, the Goldman Sachs estimate of earnings is lower than the consensus. If inflation increased again in June and the Retail Sales disappoints, markets could give up the gains from last week’s rally.