Speaking Of Short-Term Noise:

It's Employment Data Day!

I have said it before and shall do so again:

The headline data, US Non-Farm Payrolls, will be revised and re-revised well into the future (it is the trend over longer periods that is important). Stats Canada's data is equally as erratic.

The amount of attention paid by the media to this monthly number is classic noise.

The belief that the US Federal Reserve will make any final decisions based on this data is naive.

There are significantly more important global economic developments that have more far reaching implications than one month's US jobs data.

With that in mind:

• US non-farm payrolls rose by a less than expected 173,000
• Revisions to previous months were +44,000 (as I said, there are always revisions).
• The unemployment Rate fell to 5.1%
• Wage growth was a better than expected +.3%
• Labour force participation remains at historically low levels (62.6%).

In Canada: (according to Statscan)

http://www.statcan.gc.ca/daily-quotidien/150904/dq150904a-eng.htm

Employment was little changed (+12,000 or +0.1%) in August. However, the unemployment rate increased 0.2 percentage points to 7.0%, as more people searched for work. Prior to August, the unemployment rate had held steady at 6.8% for six consecutive months.

• An increase of 54,000 in full-time employment in August was mostly offset by a decline of 42,000 in part-time work.
  Compared with 12 months earlier, employment was up by 193,000 or 1.1%. Over the same period, full-time work increased by 318,000 (+2.2%) while part time declined by 125,000 (-3.6%). At the same time, the total number of hours worked rose 2.1%.

In the US, better wage growth is important and positive (and slightly inflationary).

In Canada, more full-time employment is positive.

Whether the US Fed raises rates in September or December (or somewhere in between) it matters little in the long-term.

Any rate increases will be gradual and will be be limited.

In Canada, there will be no change in the BOC rate, likely into 2017.

Whatever the case, bond markets are telling us that the lack of inflation will keep longer-term interest rates low well into the future = a low return environment.

So: "pay no attention to the man behind the curtain!!" (making all the noise)

And have a great labour day weekend!

www.highrockcapital.ca