Source: Caixin.
Author: Liu Rui.

On Friday, US Eastern Time, a surprise US non-farm employment report for July triggered a 'shockwave' in the US stock market and sparked a heated discussion about the expected rate cut next month by the Fed.

From the overall data perspective, this report can be described as 'blowing up everywhere': the seasonally adjusted non-farm employment population recorded 0.114 million people in July, the smallest increase since April 2024, far lower than the expected 0.175 million people. At the same time, the unexpected rise in the US unemployment rate in July to 4.3%, a high after the epidemic, while the recruitment speed in the private sector dropped to the lowest level in 16 months.

The non-farm employment market report released by the US Bureau of Labor Statistics has obviously increased concerns about the actual situation of the US economy in the market.

However, despite this, more truths hidden behind the bad employment numbers in this report can still be digged out from some segmented data. And among them, there are four details worth the market to breathe a little, understanding that this report may not mean the end of the US economy.

Are they all caused by hurricanes?

Around the early morning of July 8th local time, Hurricane 'Belier' landed in Texas, USA with a strength of category 1. This hurricane is the strongest hurricane in the same period of history since 1851, and also the global 'wind king' so far in 2024.

Although this hurricane began to weaken the day after it landed in the United States, its impact continued for several days. About 2.7 million households and businesses in Houston, USA were without power for several days, and even tens of thousands of users in Texas still have not fully restored their power supply more than ten days after the hurricane landed.

Although a big footnote was added by the US Bureau of Labor Statistics on the non-farm report, saying that Hurricane Belier did not have a significant impact on this month’s data, many economists do not agree with this.

In fact, just looking at the 'number of employees who did not go to work due to bad weather' counted by the US Bureau of Labor Statistics in the report can refute their own claims.

The report showed that in July this year, the number of non-agricultural employees in the United States who did not go to work due to bad weather was 0.436 million, and the number of agricultural employees was 0.461 million. This data not only set a record for July, but also is more than 10 times the average level in July every year since the Labor Statistics Bureau started tracking this indicator in 1976.

In addition, more than one million people could only work part-time due to weather reasons, which also set a record for July data in history.

Jefferies US analyst Thomas Simons wrote: "We cannot be sure that Belier is not responsible for the weakness of the data."

In addition, among the unemployment figures reported in July this year, the number of people who indicated that they were only temporarily unemployed was the highest in the past three years, accounting for more than half of the total unemployment (0.352 million people).

And the significant increase in the number of temporarily unemployed is also related to Hurricane Belier.

"We believe that some of the layoffs may be related to Hurricane Belier," Nancy Vanden Houten, chief US economist at the Oxford Economic Research Institute, wrote in an analytical article.

Economists expect that if the unemployment status of these temporarily unemployed people only lasts for a few weeks, most of them will be hired in August or September, which means that employment data for the next two months will improve significantly.

The employment in the construction industry is still active.

The construction industry employment remains active.

The employment numbers in the construction industry are usually leading indicators of economic changes, especially for industries such as the residential construction industry.

In July of this year, the employment data in the US construction industry continued to grow at a stable pace: in July, the US construction industry added 0.025 million jobs, slightly higher than the average monthly increase of about 0.02 million construction jobs before the epidemic in the past five years.

This may indicate that the sluggish housing starts rate in the US for several months will recover, and also indicates that the overall economic situation in the US may not be as pessimistic as the overall employment figures suggest.

The employment rate for middle-aged workers is still high.

Economists closely follow so-called "middle-aged workers" - workers between the ages of 25 and 54 - because they make up a large proportion of the US labor force.

Although the overall employment data in July was poor, the employment rate of this middle-aged population was very strong.

In July of this year, the participation rate of middle-aged workers rose to 84%, the highest level since 2001.

For middle-aged men, this proportion rose to 90%, a new high since the 2007-2009 financial crisis.

For middle-aged women, this proportion was 78.1%, the same as the historical high set in May of this year.

Editor/Jeffy