| Consensus | Actual | Previous | |
|---|---|---|---|
| Employment - M/M | 20,500 | -6,400 | 59,900 |
| Unemployment Rate | 5.5% | 5.5% | 5.4% |
Highlights
Employment unexpectedly declined 6,400 in July, while Econoday's consensus was centered around a 20,500 increase. The unemployment rate rose to 5.5 percent from 5.4 percent, as expected. The participation rate inched down to 65.6 percent from 65.7 percent.
The employment decline was concentrated in part-time employment, which was down 8,100, while the economy added 1,700 full-time jobs. The number of employees moved down 500 as a 17,500 decrease in the private sector outweighed a 17,100 gain in the public sector. Self-employment declined 5,900.
Despite the job cuts and the unemployment rate rising for the third consecutive time, average hourly wage growth accelerated to 5.0 percent year-over-year in July from 4.2 percent in June. Hours worked were virtually unchanged on the month, for a 12-month advance of 2.1 percent.
Looking at the industry breakdown, weakness was concentrated in goods-producing industries, which shed 27,500 jobs, led by a 44,700 plunge in construction. Manufacturing increased 5,200.
The services sector added 21,200 jobs on the month. Among the largest winners, health care and social assistance soared 25,100, educational services were up 18,800, finance, insurance, real estate, rental and leasing increased 15,000, and accommodation rose 8,400. Together, these industries added 67,300 jobs. By contrast, public administration was down 16,700, information, culture and recreation down 15,800, transportation and warehousing down 13,900, and professional, scientific and technical services down 10,300.
With today's report, Econoday's Consensus Divergence Index is at minus 9, consistent with an economy that is slightly underperforming. The report also confirms signs of easing in the labour market in the form of increased worker availability.
Less welcoming was the rebound in the pace of wage growth reminding that conditions remain tight as highlighted by the central bank in its July 12 policy statement and accompanying Monetary Policy Report.
The employment decline was concentrated in part-time employment, which was down 8,100, while the economy added 1,700 full-time jobs. The number of employees moved down 500 as a 17,500 decrease in the private sector outweighed a 17,100 gain in the public sector. Self-employment declined 5,900.
Despite the job cuts and the unemployment rate rising for the third consecutive time, average hourly wage growth accelerated to 5.0 percent year-over-year in July from 4.2 percent in June. Hours worked were virtually unchanged on the month, for a 12-month advance of 2.1 percent.
Looking at the industry breakdown, weakness was concentrated in goods-producing industries, which shed 27,500 jobs, led by a 44,700 plunge in construction. Manufacturing increased 5,200.
The services sector added 21,200 jobs on the month. Among the largest winners, health care and social assistance soared 25,100, educational services were up 18,800, finance, insurance, real estate, rental and leasing increased 15,000, and accommodation rose 8,400. Together, these industries added 67,300 jobs. By contrast, public administration was down 16,700, information, culture and recreation down 15,800, transportation and warehousing down 13,900, and professional, scientific and technical services down 10,300.
With today's report, Econoday's Consensus Divergence Index is at minus 9, consistent with an economy that is slightly underperforming. The report also confirms signs of easing in the labour market in the form of increased worker availability.
Less welcoming was the rebound in the pace of wage growth reminding that conditions remain tight as highlighted by the central bank in its July 12 policy statement and accompanying Monetary Policy Report.
Market Consensus Before Announcement
Employment in July is expected to rise 20,500 versus June's much higher-than-expected 59,900. July's unemployment rate is expected to edge higher to 5.5 percent.
Definition
The Labour Force Survey is a key economic indicator giving an overall picture of employment and unemployment. Employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The unemployment rate measures the number of unemployed as a percentage of the labor force.
Description
As in the U.S., this report is used as an indicator of the health of the domestic economy. Employment trends and break-downs by industry groups highlight the strength in job creation and the implications for future sectoral activity. The unemployment rate is used as an indicator of tightness in labor markets and can foreshadow a future increase in wages. Labor force data provide investors with the earliest signs of industry performance. While other data are produced with a month or two delay, these data are available only a week to 10 days after the end of the latest month. Reactions can be dramatic - especially when the result is unanticipated.
The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.
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.
The information in the report is invaluable for investors. By looking at employment trends in the various sectors, investors can take more strategic control of their portfolio. If employment in certain industries is growing, there could be investment opportunities in the firms within that industry.
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.
