The headline numbers in the employment report were very weak as payroll employment rose by only 88,000 and the household survey reported a -206,000 drop in employment while the labor force fell by -496,000. The futures markets are reacting very badly. But the workweek expanded and aggregrate hours worked increased 0.3% as compared to 0.5% last month.
After falling to below trend last year hours worked is now back on the 0.2% trend displayed earlier in the cycle. So basically it looks like the headline numbers are overstating the weakness.
Interestingly, my bond valuation model still says that the 10 year T Bond yield should be about 1.5%.
The model still has fed funds in it, but nothing else to capture other measure of fed policy..
Average hourly earnings were essentially unchanged last month, but the smoothed data still implies that wage gains have bottomed.
Average weekly earnings also still looks like it has bottomed.