US Jobs Data Comes in Weaker Than Expected
It would be remiss of me not to kick off this morning’s report with a rundown of last Friday’s US jobs report, which was a belter. Headline payrolls fell by 23,000, versus expectations of an 80,000 gain. The BLS noted that May was revised down by 66,000 (from 129,000) and June by 37,000 (from 57,000), resulting in combined May-June revisions of 103,000 lower than previous reports. This also takes the three-month rolling average to just 20,000, which is below the expected breakeven rate of around 50,000. Under normal conditions, that shortfall would push the unemployment rate up. Instead, it fell to 4.1%, because the labour force itself shrank by 264,000.
Adding to this weak vibe, average wage growth came in below expectations at 3.2% YY (from 3.5% in June) and 0.1% MM (from 0.3%). The unemployment rate ticked lower to 4.1% from 4.2%, but this was not the positive signal it might appear. Net employment actually fell by 87,000, and the labour force participation rate dropped to its lowest level since early 2021 at 61.4%. In other words, the improvement in the headline rate was a participation story, not a jobs story – echoing the same dynamic seen in June’s report.
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