Moushumi Paul (R) of the USDA interviews job applicant Sherry Rose (L) at a U.S. Chamber of Commerce Foundation “Hiring Our Heroes” military job fair in Washington January 8, 2016. April’s growth, meanwhile, was revised upward from 123,000 to 144,000.
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The broadly positive jobs report suggests that the USA economy was improving before the United Kingdom startled the world late last month by voting to leave the European Union. This means no repeat of May’s disastrous jobs report, which conveniently afforded the Fed an excuse to hold off on raising rates last month despite the coordinated hawkish message that policy makers had communicated to the markets in the weeks leading up to it.
“We still rank among the best among the industrial economies”, said Patrick Newport, an economist at IHS Global Insight said.
Investors registered their relief Friday by sending stock prices soaring.
A market measure of bond investors’ 10-year inflation outlook, known as the 5-year, 5-year forward inflation breakeven rate, fell to 1.45 percent earlier this week, down from a recent peak of 1.8 percent on April 29.
Stocks jumped on Friday and US Treasury yields edged up from this week’s record lows after data showed that US job growth accelerated rapidly in June, surpassing even the most optimistic of forecasts. But that occurred mainly for an encouraging reason: More Americans sought jobs – a sign of growing confidence – though most didn’t immediately find work. The government counts people as unemployed only if they’re looking for a job.
Still, the data will provide some critical insight into the US economy’s health. The presumptive Republican presidential nominee had referred to May’s weak jobs report as a “bombshell” but didn’t comment on Friday’s report.
May’s strike by workers at telecoms giant Verizon had cut 37,000 jobs off the Bureau of Labor Statistics’ previous payrolls report. Professional and business services, which includes accountants, engineers and architects, as well as temporary workers, gained 38,000.
That sentiment signaled a shift from their April meeting, when many Fed policymakers had indicated that they were prepared to raise rates as soon as June if the job market and the economy continued to improve. Most economists expect the Fed to remain cautious as it gauges the impact of the Brexit vote and to delay the next increase, perhaps until December or later.
“They’re much more in risk management mode, much more concerned about developments overseas and it’s not clear how global factors will affect the United States economy”.
“Today’s report helps the case for more Fed tightening before too long if strength is sustained although officials are being ultra-cautious amidst turmoil in global markets”, Jim O’Sullivan, chief USA economist at High Frequency Economics, wrote in a research report.
“The spillovers from Brexit are pretty small”, Harris added.
Friday’s gains, which saw the S&P 500 index finish a hair below its record closing high, were enough for US equities and MSCI’s gauge of markets around the world to end the week in the green.
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Average hourly pay, a chronic weak spot in the seven-year recovery from the Great Recession, ticked up in June, the latest sign wages are creeping higher. After the June data release, there was just a 24 percent chance of a hike priced in for December – it had been 12 percent on Thursday night, according to Jefferies.
