Job Report Disappoints, Stocks Decline

Anyone that’s been in the investing world for a while knows how important job data can be for markets. During the past few months, the data consistently exceeded expectations, suggesting a strong recovery from the pandemic. However, new difficulties constantly arise, especially during the past few reports. Workers seem to be discontent, and many workplaces have reported shortages in the workforce. Job data reflect this, ending up lower than many had hoped.

Naturally, that decline also instantly transferred into markets, with many vital indicators slumping on Friday. US Stock indexes all showed a drop in early trading, with some such as the Dow sliding by 0.3%. However, as the day went by, all three major indexes seem to have recovered to some degree. We’re looking at losses that dance around the 0.1% mark, which isn’t that scary to investors.

However, there is a decent chance that the news is yet to properly set in and might further impact prices. Namely, the July job data showed us a massive improvement, with 1.1 jobs added in the US. That led to optimistic estimates for the following month, which missed the mark by a significant margin. While experts expected about 750,000 new jobs, there was only an increase of 235,000. That’s less than three times fewer than the apparently overly optimistic reports anticipated.

The silver lining here is that the unemployment statistics surprisingly matched the expected data. That means that while fewer positions were filled, fewer were abandoned as well. In July, the massive job data increase led to unemployment dropping to 5.4%. For August, the number slid down to the 5.2% that many experts managed to forecast precisely. 

The brunt of the data mismatch comes from the leisure and hospitality sectors. As such, it’s not difficult to deduce that delta variant concerns are the primary culprit.