Cathie Wood "U.S. employment figures may be distorted"...Why Wall Street distrusts it?

▲ Cathie Wood, U.S. Employment Figures/AI Generated Image

As the U.S. June employment figures fluctuated more than expected, Cathie Wood publicly raised the possibility of statistical distortion, and questions about the reliability of the numbers are growing on Wall Street.

According to economic media outlet Benzinga on July 3 (local time), the U.S. economy added only 57,000 non-farm jobs in June, significantly falling short of the market forecast of 100,000 based on FactSet. The slowdown was also significant compared to the 129,000 increase in May. The household survey showed employment decreasing by over 500,000, highlighting a discrepancy between the establishment survey and the household survey.

Cathie Wood, CEO of ARK Invest, described the employment figures as an "odd jobs report." Wood pointed out that based on these figures alone, "we might think we're in a recession." She stated that "government statistics are highly distorted" and viewed positively the Federal Reserve's plan to incorporate more private sector data to verify official indicators.

The biggest controversy arose in the leisure and hospitality sector. This sector recorded a decrease of 61,000 jobs in June. The market reacted by calling it unusual that leisure and hospitality jobs decreased despite a major global sports event like the World Cup taking place.

Jamie Cox, Managing Partner at Harris Financial Group, called the figures "misleading and should be ignored." Cox stated, "There's no chance that the leisure and hospitality sector would be negative in the middle of the World Cup." He anticipates an upward revision in the coming months.

Although the headline unemployment rate decreased to 4.2%, detailed indicators pointed to a weakening labor market. The labor force participation rate fell to 61.5%, and Jeffrey Roach, Chief Economist at LPL Financial, analyzed that approximately 2.5 million people have left the labor market since last year. Chris Zaccarelli of Northlight Asset Management suggested that the slowdown in job growth could halt the pressure from hawkish members within the Fed for rapid interest rate hikes.

Despite the controversy surrounding employment figures, the market continued its upward trend this year. The S&P 500 Index rose 9.11% year-to-date, the Nasdaq Composite 11.18%, and the Dow Jones Industrial Average 9.34%. The State Street SPDR Dow Jones Industrial Average ETF Trust (DIA), an exchange-traded fund tracking the Dow Jones Industrial Average, closed up 1.05% on Thursday.

[Article Summary]

-U.S. non-farm jobs increased by only 57,000 in June, falling short of both the forecast of 100,000 and May's 129,000.

-Cathie Wood described this employment report as an "odd jobs report," raising the possibility of government statistical distortion.

-A decrease of 61,000 jobs in the leisure and hospitality sector and a drop in the labor force participation rate to 61.5% fueled controversy over the reliability of the indicators.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*