MacroEdge 9/4 Midweek Report: August Frost? A Look at the August Labor Market Data.
In this midweek report - the MacroEdge Team dives into the latest critical economic data from August including real estate data, employment data, and more. #MacroEdge
Good evening MacroEdge Readers and Community,
Busy start to the week here from the MacroEdge desk, my post-golf recovery is proceeding well on the elbow and I think things are up from here, so I have some great insights to share from myself and our team for the upcoming labor market report and some of the data we’ve observed from this week confirming a cooling labor market and a Fed that is quickly becoming much more obsessed with the labor market.
This week we’ve seen a garden variety of important economic data and insights - particularly on manufacturing and employment. As the Fed continues its late march towards focusing on the labor market data (chasing a car that is pulling away given the current data landscape) - we saw more of these cooling trends in the JOLTS survey from the BLS today. They confirmed much of what we’ve already been analyzing - particularly on construction and the more cyclical sectors like manufacturing: headwinds are broadening out for the labor market. Given the data on the manufacturing sector and the real estate sector - the Fed is staring at a labor market that is nearing the true ‘point of no return’ where we observe unemployment accelerates for a year or more and job openings continue to fall for an extended duration as corporate profits are dented, asset prices fall, and we see a spin cycle of risk observed and repeat itself if the cycle is prolonged. The current backdrop supports the Fed kicking off the easing cycle with a 50bp rate cut, although this may be shifted towards a 25bp cut if the August data comes in *hotter than expected* - which right now would be a 4.2 or 4.3% U3 figure and >150,000 NFP, in our opinion.
While there is going to be a lot of emphasis placed on this single data report from this weekend - we simply see it as yet another marker in our broader observance and identification of broadening labor market weakness that we began discussing in August of 2023. At that time there were pieces of the puzzle we were starting to assemble of cracks appearing in the labor market - but the picture has become clearer as the cycle has progressed and monetary lags have begun to weigh in the forms of slower job growth (less hirings), and more firings (layoffs rising, large job cuts, elevated bankruptcies, and a sharp decline in construction and manufacturing job openings. We are however concerned that the labor market is already past the point of no return, particularly with real estate and manufacturing showing as much weakness as they are. This isn’t ‘doom and gloom’ - it’s the objective, data reality, which is what we’re interested in here so that we can provide our own Investment Research desk and our readers with the best information possible.
With that, we’ll have more information this weekend on the rollout of RESights - our alternative real estate research and perspectives division with fresh services - this weekend. More to come from our 2025 Roadmap rollouts through the remainder of the year. Ozone can be accessed at:
