The employment report does not look pretty

Here's how to read it.

On the face of it, parts of August’s U.S. employment report, released on September 6th, don’t look too pretty.

Non-farm payrolls increased by a tad less than expected, (but only missed by a paltry 11,000), and there were revisions down totalling 74,000 to the previous two months’ figures, and at first sight the reasons for the drop in the headline level of employment from 7.4 per cent to 7.3 per cent look disappointing, in that the fall was driven by a drop of 312,000 in the labour force seeking work, whilst the numbers of those in work actually declined by only 115,000, but look closer and you discover that the number of people who aren't working, but would like to be, actually collapsed by 334,000 in August! Think about that. What that is telling us is that work patterns are changing-there are more who want to work only part-time and this fall is also evidence of something much more important to the Fed-a structural change in the U.S. economy that implies it is not going to be able to employ as many people, even when it is growing full tilt-maybe the famous, but enormously difficult to measure, output gap, has shrunk.

The so-called Household Survey of employment, which kicks out the headline unemployment rate, is notoriously volatile, when compared to the Establishment Survey from which non-farm payroll changes are calculated.

The above goes part of the way to explain why I feel these figures weren’t weak enough to stop the Fed tapering down its purchases of US Treasuries, (not Mortgage Bonds), at its 18 Sept. meeting. They may lead to a smaller reduction in purchases, but even that may not be the case. Why?

Well, even parts of the Household Survey were positive-average hourly earnings ticked up from flat in July, (initially reported as -0.1 per cent), to +0.2 per cent, and the average workweek increased from 34.4 hours to 34.5. The broader U6 measure of unemployment fell even further, to 13.7 per cent, from 14.0 per cent. Remember, the Fed told us it wouldn’t just look at the headline figure, but that it would drill down into its composition and look at other labour market indicators.

Just as importantly however, (especially given the volatility and margin for error of the employment survey), we have to remember that recently we have been treated to a veritable slew of positive data surprises, including a drop in the 4-week moving average of those making initial jobless claims to 329,000; a new post-recession low. Other good news has come in the shape of better than expected releases for Existing Home sales, Consumer Confidence, Vehicle Sales and, most encouragingly, as they are forward-looking indicators, the Institute of Supply Managers’ surveys of sentiment in both the manufacturing and services sectors.

None of the above should stand in the way of further advances for developed market equities. Yields are normalising for "good" reasons, and the Fed has done a good job in ensuring they don’t surprise us with their first steps towards tightening-this is not a repeat of 1994’s bond market rout.

Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.