By: specoletta on Venerdì 02 Agosto 2013 18:01
Here is the lead paragraph from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:
Total nonfarm payroll employment increased by 162,000 in July, and the unemployment rate edged down to 7.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade, food services and drinking places, financial activities, and wholesale trade.
Today's nonfarm number was weaker than the Investing.com forecast, which was for 184K new nonfarm jobs, but the unemployment rate dropped to 7.4% from 7.6%. Investing.com was expecting a decline to 7.5%. The nonfarm jobs number for the previous month was revised downward to 188K from the original 195K.
The unemployment peak for the current cycle was 10.0% in October 2009. The chart here shows the pattern of unemployment, recessions and both the nominal and real (inflation-adjusted) price of the S&P Composite since 1948.
Unemployment is usually a lagging indicator that moves inversely with equity prices (top chart). Note the increasing peaks in unemployment in 1971, 1975 and 1982. The inverse pattern becomes clearer when viewed against real (inflation-adjusted) S&P Composite, with its successively lower bear market bottoms. The mirror relationship seems to be repeating itself with the most recent and previous bear markets.