Why is the jobs report confusing?

Thoughts of the Day

On Friday, the US Non-Farm Payrolls from the US jobs report showed that +272K jobs were added to the US economy in May, and this was much higher than the +185K jobs that were expected to be added and higher than the +165K that was added the month before. This showed that the US jobs market is stronger than expected.

However, the Unemployment Rate, which was expected to stay at 3.9%, rose to 4.0% and this means that the jobs market is weaker than expected. Participation rate, which is the percentage of the working-age population that is working or looking for a job, dropped from 62.7% to 62.5%. This means that less people are looking for jobs, and this is usually a sign of a weak jobs market as people who have not been successful at finding jobs could be giving up the job search. 

What gives? The NFP is from the Establishment Survey, and that survey is conducted among companies and government entities while the Unemployment Rate and Participation Rate are from the Household Survey and that is done by asking official households if they have jobs. So, the NFP counts the number of jobs (that employers are paying for) and the Household survey estimates the number of people working. So, if there’s 3 people in the workforce and there’s 3 jobs, and if 1 of them is working all 3 jobs, NFP shows 3 jobs added, while the household survey shows that 2 people are unemployed. As such, they could be reporting correctly but the conclusions could be quite different. 

The NFP shows that many jobs are being created, but the household survey is showing that official households lost -625K full time jobs and part-time jobs rose +286K in May. This could mean that many unofficial workers (i.e. illegal immigrants) are getting all the newly created jobs, and many people are working multiple jobs, especially in the part-time sector. 

The number of people working multiple jobs hit a near-record high of 8.4 million last month. This is not a sign of a strong jobs market. While the market reacted to the headline of many jobs being created, the underlying fundamentals might actually be weakening. This is something that will be becoming clearer in the months ahead.

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The move towards electric vehicles has been plagued by range anxiety (the fear that the EV won’t have sufficient charge to complete its duty) and the long wait for EVs to charge, especially in cross country drives. But what if instead of having to charge these EVs, we can simply swap their batteries out instead like we did for our electronics in the 1990s to 2000s. That’s exactly what’s happening in China with electric taxis. This is the case with Chinese EV company Nio as well. This will reduce the “recharging” from at least 30 minutes to just a minute (which is around the same time ICE cars take to refuel).

Read more about how these battery swapping stations are being used in China here.

Week Ahead


  • Australia Bank Holiday (King’s Birthday)
  • China Bank Holiday (Dragon Boat Festival)


  • Nothing noteworthy


  • Chinese Inflation (CPI: +0.3% Year-on-Year expected and prev, PPI: -1.8% YoY expected and -2.5% prev)
  • US Inflation – Consumer Price Index (Headline: +3.4% YoY expected and prev, Core: +3.5% expected and +3.6% prev)
  • Federal Reserve Interest Rate Decision (expect interest rates to be kept at 5.5%)


  • Australian Labour Data (Employment Change: +39K expected vs +38.5K previous, Unemployment rate: 4% expected vs 4.1% previous, Participation Rate: 66.7% expected and previous)
  • US Inflation – Producer Price Index (Headline: +2.2% YoY expected and prev, Core: +2.3% expected and +2.4% prev)


  • Bank of Japan Monetary Policy Decision (expect interest rates to be kept at 0.1%)
  • US University of Michigan Preliminary Consumer Data (Consumer Sentiment: 73 expected and 69.1 prev, Consumer Expectations: 75 vs 68.8)
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What Happened Yesterday

Market Movements as of New York Close 7 Jun 24 (9 Jun for Crypto)

[US Labour] The US Nonfarm Payrolls surprised markets with a higher than expected print that showed that +272k were added to the US economy last month (vs +185k expected and +165k prev [revised from +175k]). Despite more jobs than expected being created, the US Unemployment Rate rose slightly to 4% (vs 3.9% expected and prev).

The US Average Hourly Earnings YoY edged higher to +4.1% Year-on-Year (vs +3.9% expected and +4% prev [revised from +3.9%]). The Labour Force Participation Rate fell slightly to 62.5% from 62.7%. The US 2 year bond yields jumped +0.15% while the US 10 year bond yields rose +0.14% as a result of the unexpectedly strong labour data.

The US stock market opened lower from Thursday due to the strong NFP data. The market then started to trade higher in the early New York session before reversing and erasing the gains in the second half of the session. The S&P 500 edged -0.11% lower (high: +0.41%, low: -0.40%), the Dow Jones decreased -0.22% (high: +0.56%, low: -0.35%) while the Nasdaq dipped -0.11% (high: +0.49%, low: -0.33%).

The crypto market traded lower on Friday due to the NFP data as well and stayed at weaker levels through the weekend. Bitcoin is down -1.63% while Ether is down -2.86%.
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Headlines & Market Impact

Short bets against Nvidia stand at $34 billion, S3 Partners says

Notable Snippet:  As Nvidia (NVDA.O) threatens to dethrone Microsoft (MSFT.O)as the world’s most valuable company, at least a few investors are betting its soaring shares will return to earth.

Outstanding short bets against Nvidia stand at about $34 billion, nearly twice as much as what has been bet against Apple (AAPL.O) and Tesla (TSLA.O), the next two biggest short bets combined, according to a report from S3 Partners on Thursday.

Short sellers have bet about $19 billion against Apple and $18 billion against Tesla, S3’s data shows.

However, the short bets against Nvidia are equivalent to just 1% of its stock market value, according to LSEG data.

Insatiable demand for its high-end AI processors has sent Nvidia’s stock soaring 143% in 2024.

On Wednesday, Nvidia’s stock market value reached $3.012 trillion, eclipsing Apple to become the world’s second most valuable company.

Nvidia’s stock market value retreated almost 2% to $2.96 trillion on Thursday. Microsoft’s market value stands at $3.15 trillion after the technology heavyweight’s stock climbed 13% year to date.

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Japan government to call for flexible policy amid price uncertainty, draft blueprint shows

Notable Snippet: Japan’s government will highlight the need to work closely with the central bank and guide policy “flexibly” in the wake of soft consumption and uncertainty over the inflation outlook, a draft of its annual economic blueprint seen by Reuters showed.

“Monetary policy has entered a new stage,” which required the government and the Bank of Japan to “continue working closely and guide policy flexibly in accordance to economic and price developments,” according to the draft.

By keeping inflation stably around the BOJ’s 2% target, policymakers will seek to create an environment where wages rise faster than inflation on a sustained basis, the draft said.

The government draft will be presented to ruling party lawmakers for deliberations, before being finalised at a Cabinet meeting on June 21.

In the draft, the government said consumption “lacked momentum” with the outlook on prices unclear due in part to the effect of recent yen declines.

It also flagged lingering overseas risks such as the fallout from monetary tightening by central banks across the globe, and worries about soft Chinese growth.

Japan is facing a “critical moment” in shifting away from a deflation-prone economy that prioritised cost cuts, towards one where higher productivity allows more companies to keep hiking prices and wages, the draft said.

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Renewable energy will be the predominant power source for data centres, Nextracker CEO says

Notable Snippet: The surging power needs of artificial intelligence and data centres will be met primarily with renewable energy — not fossil fuels, according to the CEO of a leading solar company.

The natural gas industry believes it is best positioned to fulfil the surging power demand from data centres, arguing that renewables aren’t reliable enough to power these energy-hungry projects alone.

But Dan Shugar, the CEO of Nextracker, said the low cost and rapid deployment of solar as well as the ambitious climate goals of Big Tech will make renewable energy the preferred power choice for data centres.

Nextracker builds systems that allow solar panels to track the position of the sun, increasing the efficiency of renewable power plants. The company has beat Wall Street expectations for four straight quarters. Nextracker has a backlog of more than $4 billion and has shipped 100 gigawatts to date, twice the peak power load of California.

Whereas older data centres may have been 100 to 200 megawatts in size, some of the “monster data centres” today may be as big as 1,000 megawatts, Shugar said. That is equivalent to the power produced by the average nuclear plant.

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Phan Vee Leung
CIO & Founder, TrackRecord