The good, bad and the ugly..
The US employment report came out and there was some good, there was some bad and that combination makes it ugly for traders.
![](http://az705044.vo.msecnd.net/20160902/2016-09-02_11-02-13aaaaaa.jpg)
The Good:
- The 3 month average job gain is 232K. Not bad. When you compare to the prior 3 months where the 3 numbers were 186K, 144K and 24K (average of 118K) it explains why the expectations for GDP might be looking better in the 2H of 2016 (and why the 1H stunk).
- The 12 month average is 204K. When you compare the 12 month running average of 204K to the 2015 (for the calendar year) at 229K, the trend is slowing, but putting things into perspective, it is 204K per month with an employment rate at a lower 4.9%.
- 4.9% is still low.
The Bad:
- 151K. In this economy where Productivity is negative, there is always that feeling/worry that businesses will look at the worker productivity and says "What the hell...you cost too much for what I am getting". So 151k turns to something lower. The Fed - being of the ilk who probably over analyzes everything, might see the 151K and think, "What's another meeting or two of waiting among friends? Last year we did December, why not do it again."
- 0.1% Average hourly earnings/2.4% YoY is going the wrong way. The Average hourly earnings during the 2007 before the recession had a low of 2.7% and a high or 3.6%. We reached 2.7% in this cycle (the old low) but are back down to 2.4%. Then again productivity stinks so why increase wages.
- Average weekly hours worked declined to 34.3 from 34.4 hours. Let's face it, that measure does not move much but looking at the chart, that is the lowest reading on it. Means personal income should be weak when it is released.
- Goods producing jobs a big negative. Manufacturing -14K. Mining -4K and Construction -6K. Not enough qualified construction workers? There were your amount of construction workers pre-2008. Not enough now? HMMMMM.
The UGLY:
You can pick the report apart (and it sure is happening). What is most important is how the Fed views it and how they act.
In the past, they have swayed with the wind. When things were good and they needed just one more number to push the button, there was a disappointment and things went back to wait and see mode.
This is another one of those dips in jobs/one more disappointment (if only it was 185K?). Does the work week dip and hourly earnings dip have an impact? In which case they wait. Does the Fed look at the weaker number as just what happens when at full employment? In which case they close their eyes and hit the +0.25% button.
It is hard to predict, which makes trading potentially UGLY. That is what we are seeing in trading today (at least for some pairs) and we may see more of the ugliness continue until the 21st. I will be looking for technical levels to lean against. If the big guys decide to push in September, we have plenty of break out levels to eye - above and below. You have to lean against extremes. If you get a break, you have to go with it just in case, but understand the breaks can fail and the market can go the other way. It is what happens when you get good and when you get bad. It just makes things potentially ugly for traders.