| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Nonfarm Payrolls - M/M | 213,000 | 110,000 to 263,000 | 209,000 | 339,000 | 306,000 |
| Unemployment Rate | 3.6% | 3.6% to 3.7% | 3.6% | 3.7% | |
| Private Payrolls - M/M | 199,000 | 180,000 to 253,000 | 149,000 | 283,000 | 259,000 |
| Manufacturing Payrolls - M/M | 5,000 | -1,000 to 5,000 | 7,000 | -2,000 | -3,000 |
| Participation Rate | 62.6% | 62.6% | |||
| Average Hourly Earnings - M/M | 0.3% | 0.3% to 0.4% | 0.4% | 0.3% | 0.4% |
| Average Hourly Earnings - Y/Y | 4.2% | 4.1% to 4.3% | 4.4% | 4.3% | 4.4% |
| Average Workweek | 34.3hrs | 34.3hrs to 34.4hrs | 34.4hrs | 34.3hrs |
Highlights
Pencil in that month-end rate hike! Nonfarm payrolls rose 209,000 in June which is right at Econoday's 213,000 consensus, as is the unemployment rate which edged 1 tenth lower to a very tight 3.6 percent which hit Econoday's consensus. Exceeding the consensus, however, are wage pressures, up 0.4 percent on the month for average hourly earnings versus expectations for 0.3 percent for a year-over-year rate of 4.4 percent versus expectations for 4.2 percent. Though they have been higher, these wage rates, both monthly and yearly, have not changed for the last three reports.
Government payrolls were a major factor in the month, adding 60,000 to headline payrolls and excluding which private payrolls rose 149,000 which is well under Econoday's consensus. This along with tangible downward revisions to May nonfarm payrolls (now 306,000 versus an initial 339,000) offer some offset to the general strength of the data, but not that much offset. The rise in government payrolls included 27,000 at the state level and 32,000 at the local level. Yet June's 60,000 gain is actually lower than this year's average monthly gain of 63,000.
Health care and social assistance added an in-trend 65,200 payrolls, construction added a solid 23,000 and manufacturing 7,000, the latter modest growth but slightly higher than expected. Negatives included retail, down 11,200, and temporary help services which fell 12,600.
Nonfarm payrolls have averaged 244,000 over the past three months which is probably good enough to be described as"robust". And though wages aren't accelerating, they're stuck at a highly elevated rate of growth. Strength in labor demand will give the Fed the cover it wants to resume hiking interest rates.
This report on net came in very close to consensus forecasts leaving Econoday's Consensus Divergence Index at minus 5 and very close to the zero line to indicate that US economic data are hitting expectations.
Government payrolls were a major factor in the month, adding 60,000 to headline payrolls and excluding which private payrolls rose 149,000 which is well under Econoday's consensus. This along with tangible downward revisions to May nonfarm payrolls (now 306,000 versus an initial 339,000) offer some offset to the general strength of the data, but not that much offset. The rise in government payrolls included 27,000 at the state level and 32,000 at the local level. Yet June's 60,000 gain is actually lower than this year's average monthly gain of 63,000.
Health care and social assistance added an in-trend 65,200 payrolls, construction added a solid 23,000 and manufacturing 7,000, the latter modest growth but slightly higher than expected. Negatives included retail, down 11,200, and temporary help services which fell 12,600.
Nonfarm payrolls have averaged 244,000 over the past three months which is probably good enough to be described as"robust". And though wages aren't accelerating, they're stuck at a highly elevated rate of growth. Strength in labor demand will give the Fed the cover it wants to resume hiking interest rates.
This report on net came in very close to consensus forecasts leaving Econoday's Consensus Divergence Index at minus 5 and very close to the zero line to indicate that US economic data are hitting expectations.
Market Consensus Before Announcement
A 213,000 rise is the call for nonfarm payroll growth in June versus 339,000 in May which was much higher than expected. Average hourly earnings in June are expected to rise 0.3 percent on the month for a year-over-year rate of 4.2 percent; these would show no to very little change from 0.3 and 4.3 percent in May. June's unemployment rate is expected to edge 1 tenth lower at 3.6 percent.
Definition
The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Description
If ever there was an economic report that can move the markets, this is it! The anticipation on Wall Street each month is palpable, the reactions can be dramatic, and the information for investors is invaluable. By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
