This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Unemployment Is Still Over 6%, So Fed Will Hold Off for Longer on Rate Hike

Stocks in this article: MSFT UAL AAL HCA

NEW YORK (TheStreet) -- Think of it like a kid's nursery rhyme: First come jobs, then come wages, then comes Janet with a...

Big Fat Ol' Interest Rate Hike? Not quite.

Friday's jobs report look pretty good, but not so good that the central bank has to raise interest rates any time soon. Employers added 209,000 new jobs in July, missing estimates of about 230,000, but an increase of 15,000 in estimated hiring for May and June wiped out nearly all of the miss. The unemployment rate rose a notch to 6.2%. The worst news was the nearly flat performance by wages, with average hourly earnings rising by only a penny to $24.45.

Read More: Kass: Avoid Most Social Media Stocks 

The report makes clear there is still enough slack in the job market to keep the Federal Reserve, led by Chair Janet Yellen, from accelerating its interest rate hikes. Yellen has made it plain she doesn't want to do that. And there is little enough inflation out there that she doesn't really have to.

It's true that the economy is picking up in earnest now.

July marks the sixth straight month of job gains of more than 200,000, the first time that has happened since 1997. Layoffs are at rock-bottom levels, with initial jobless claims at eight-year lows. When a company such as Microsoft (MSFT) does a big layoff, it's much bigger news than a few years ago. 

The striking thing in recent jobs reports has been how broad-based job gains suddenly are. The June and July ADP reports showed gains in every industry group, and emerging data show a pickup in middle-wage industries such as construction, manufacturing and state and local government that have been slower to recover from the 2008 financial panic and its aftermath.

In today's report from the Labor Department, construction added 22,000 jobs in July, manufacturers hired 28,000 people and local governments added 12,000. But acceleration there was offset by slower growth in financial industries and professional services. Air transportation businesses, including airlines such as United Continental (UAL) and American (AAL), actually shed about 3,000 jobs. Hospital companies such as HCA (HCA) trimmed 7,100 workers as more care moved to outpatient settings.

Read More: Tesla Earnings: What Wall Street's Saying

The report made no dent in the advanced metrics Yellen has been touting, talking about the job market as Nate Silver talks polls or baseball. Long-term unemployment is still above 3 million and rose a bit this month. The ranks of involuntarily part-time workers are still 7.5 million, about 3 million more than normal.

For workers, the report's wage news is the biggest disappointment. But on Wall Street, that's all good. It means that the monetary stimulus that traders are wary of giving up is just a little bit more likely now to stick around for a while.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs