After a great deal of panic whipped up by the media, recession fears are easing with a strong jobs report:
U.S. services sector activity accelerated in August and private employers boosted hiring, suggesting the economy continued to grow at a moderate pace despite trade tensions which have stoked financial market fears of a recession.
The upbeat reports on Thursday took some of the sting from data this week that showed the manufacturing sector contracted for the first time in August as the year-old trade war between the United States and China intensified.
That, together with a contraction in manufacturing employment, suggests nonfarm payrolls probably increased at a steady clip in August, even though the ADP National Employment Report on Thursday showed private payrolls surging by 195,000 jobs this month after rising by 142,000 in July.
The ADP report, which is jointly developed with Moody’s Analytics, came ahead of the release of the government’s more comprehensive employment report on Friday.
Some people have been arguing that what’s happening to US firms doing business in China is somewhat disconnected from the broader US economy as a whole, with “main street” still doing okay while “Wall Street” suffers. I was initially skeptical of these claims, but this jobs report suggests there may be more to it than I initially thought.
Regardless of whether the economy is really in trouble or not, the media has been trying for weeks to talk up a recession, and yet again they’ve fallen flat on their faces.
Reuters is trying hard to talk down this report, but I would not be surprised to see things are still okay when the government releases its own report on Friday.