If you have been watching the jobs data ahead of the unemployment report, chances are high that you would have looked for a decent to good report on Friday. The Labor Department reported what we think is somewhat of a dud. The problem is that the stock market and bond market alike want numbers that are decent but not strong enough to bring an accelerated end to Ben Bernanke and the Federal Reserve's endless quantitative easing (QE) and bond buying.
Unemployment ticked down magically to 7.3% from a prior 7.4%, but both Bloomberg and Dow Jones were looking for the rate to stay static at 7.4%. Where the dud came into play was in jobs creation. The Labor Department showed that 169,000 nonfarm payrolls were created in August, while Bloomberg was calling for 175,000. The private sector payrolls added only 152,000, and that matters much more as "real" non-government jobs. Bloomberg was expecting the private sector to have added 178,000.
Another dud is that the jobs created in July and June were lowered by a combined 74,000. That neutralizes the prior gains.
Friday's headline number might make investors worry that QE is going to taper off sooner rather than later. This may be true, but an economy only creating 152,000 private sector jobs in a month is far from hot, and not one that will pressure Bernanke and his team of Fed heads to immediately stop spending $85 billion per month to buy bonds.
The next FOMC meeting is on September 17 and 18, and now it seems that the pressure to immediately dial back and taper that $85 billion per month in bond buying may not be as pressing as it was in the past couple of weeks.