Announced this morning, the economy added 57,000 jobs in June, less than expected and the previous month was revised lower by -43,000. Reviewing the individual categories, the Health Care and Social Assistance industry was relatively strong, while the Leisure and Hospitality industry was relatively weak. The Unemployment Rate decreased one tenth to 4.2%. Average Hourly Earnings increased 0.3% in June, as expected, and grew 3.5% on an annual basis. The Labor Force Participation Rate was 61.5%, less than expected and three tenths less than the previous month. Average Weekly Hours were 34.3, the same as the previous month. Meanwhile, Initial Jobless Claims were 215,000 for the week ending June 27th, which was -1,000 less than the previous week’s revised figure.
Overall, there was another monthly increase in headline jobs, albeit a bit disappointing given it was less than expected and the previous month was revised lower. Meanwhile, the unemployment rate fell slightly given a drop in the overall labor force. Strength in health care jobs was offset by weakness in the hospitality industry. Wages increased as expected, and the annualized increase was just above the 30-year average. The participation rate fell slightly from the previous month while average weekly hours were as expected. Jobless claims were slightly less than the previous week’s revised figure and remain low overall.
The labor market remains in balance but is being impacted by tight immigration policy and as individuals in the baby boomer generation reach retirement age and exit the workforce. Given this dynamic, wage levels will be an important consideration given their impact on inflation as well as giving consumers the ability to spend. With lower oil prices in recent days, given movements to resolve the conflict in Iran, how inflation moves in the coming weeks will be a key factor in the weeks ahead.
In all, the yield on the 10-year US Treasury is lower this morning, and equity futures are higher as we head into the market open.
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