- The US economy added 528K jobs in July, more than double market estimates of 250K and above an upwardly revised 398K in June. The biggest job gains occurred in leisure and hospitality (96K), particularly in food services and drinking places (74K); professional and business services (89K), including management of companies and enterprises (13K), architectural and engineering services (13K), management and technical consulting services (12K), and scientific research and development services (10K); and health care (70K). Total nonfarm employment has increased by 22.0 million since hitting a trough in April 2020 and has returned to the pre-pandemic level.
- Unemployment rate dipped to a pandemic low of 3.5% in July, from 3.6% in the previous month, while analysts expected it to be unchanged. The number of unemployed persons edged down to 5.7 million. Meanwhile labour force participation was little changed.
- Average hourly earnings for all employees on private nonfarm payrolls in the US rose by 15 cents, or 0.5%, to $32.27 in July, following an upwardly revised 0.4% gain in the prior month and above market estimates of a 0.3% increase. Over the past 12 months, average hourly earnings have increased by 5.2%, the same pace as in June and above analysts’ estimates of a 4.9% rise.
US job growth surged much more than expected in July . Source: Bloomberg via ZeroHedge
The labour fund in the US is growing strongly, due to a strong increase in wages and rising number of new hires. This may fuel inflation further. Source: Macrobond, XTB
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Create account Try a demo Download mobile app Download mobile appSolid job growth and upward revision of previous reading indicate that the labour market is strong, while rising hourly earnings and less labour supply means that inflation may stay elevated in the coming months. All this lead markets to price a more aggressive "data dependent" FED. US rate futures price in 70% chance of 75 bps rate hike in the September meeting post-payrolls, vs 40.5% just before the publication.
The market is now pricing in 70% chances of a 75 bps hike next month (at the beginning of the week odds were at 25%). Source: Bloomberg via ZeroHedge
