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Jobs Report Looks Good

The big monthly Jobs Report from the Bureau of Labor Statistics (BLS) looked good on the headline, and even better when you pick through the data. 222K new jobs were created in the month of June, both private and public sectors, while the unemployment rate ticked up from 4.3% to 4.4%. Expectations were for just 174K June jobs and a steady 4.3% rate.

Both the unemployment rate and the U-6, or “underemployment” rate both rose a tad in the month (the U-6 from 8.4% to 8.6%), but much of this can be relegated to an increase in workforce participants as the jobs market continues to strengthen. The bigger news is in the upward revisions for the past two months: 14K for May to 152K and 33K for June to 207K. For the first half of 2017, the U.S. is averaging 180K jobs per month, and the 222K June figure is the highest since February.

Labor force participation was up to 62.8% — still indicating some slack, meaning our tightening jobs picture may have a little more room based on this statistic — but average hourly earnings rose just 0.2%, a bit less than expected. Important in gauging inflation metrics (and subsequent Fed rate hikes) is not in overall employment numbers exclusively, but also important factors such as wage growth, which we’ve seen lag overall employment growth.

The private sector brought in 187K jobs (compared to the ADP ADP report yesterday, which registered just 158K), and government (public) jobs surprisingly rose 35K in the month. Most of these jobs were reportedly on the local government level. Healthcare and Professional Services led the way with 37K and 35K June positions filled, respectively.

Market futures slid slightly up on the news, but did not spike. It's unsure why, unless rate increases are curbing enthusiasm, but it's probably a little early for such an assumption.

Whether or not these very favorable numbers alter investors’ expectations — to say nothing of the Fed’s, who now will be looked at more closely regarding another interest rate hike, more likely in September than July — remains to be seen, but it’s difficult to find a negative takeaway here. Happy Friday! 

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