In a final day of a holiday-shortened week - on an island between said holiday and the weekend - where market volume would normally be expected quite low, we also see new U.S. non-farm payroll numbers from the Bureau of Labor Statistics (BLS) ahead of the opening bell. And the headline was well above expectations: 224K new jobs were created in the month of June. The Unemployment Rate ticked up 10 basis points to 3.7%.
This 224K number easily takes out the roughly 170K consensus estimate, with revisions to the previous two months notably downward: May went from an already disappointing 75K reported last month to 72K this morning. April's impressive 224K originally printed went to a still-impressive 216K - basically, this demonstrates analysts are basically getting their projections right: the past 3 months average out to 171K jobs per month.
Leading the way was Professional/Business services at 51K, followed by Healthcare at 35K and Transportation/Warehousing at 24K. Construction gained 21K and Manufacturing 17K, which opposes what we saw Wednesday with the ADP private-sector Construction losing 18K. The Retail lost 6K jobs - this has been the consistently lagging industry in employment this year.
Average Hourly Earnings went up 6 cents to an average of $27.90 per hour - +0.2% month over month, +3.1% year over year. This rather tepid wage growth is consistent with what we've seen in previous months. Labor Force Participation ticked up to 62.9%, which has assisted the slight rise in overall Unemployment. The survey's U-6 read (aka "real unemployment") went from 7.1% last month to 7.2% this month - still near historic lows.
Market futures turned south on this robust employment news, as continuing strength in the U.S. labor market may provide solid reasoning for the Fed to forego an interest rate cut at the end of this month. Many investors had been pricing in a quarter-point - or half-point! - rate cut at the Fed's July meeting. But they were also anticipating further declines in BLS jobs numbers, such as what we saw in last month's headline.
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