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U.S. Job, Earnings Growth Stayed Strong in June, Cementing Rate Hike Outlook

Published 07/08/2022, 08:31 AM
Updated 07/08/2022, 08:39 AM
© Reuters

By Geoffrey Smith -- The U.S. economy continued to create jobs at an impressive clip in June, making it easier for the Federal Reserve to carry on with a series of aggressive raises in interest rates.

Nonfarm employment rose by 372,000 through the middle of last month, only a marginal slowdown from a revised 384,000 in May and well above analysts' forecasts for a gain of 268,000.  The Department noted particularly strong gains in professional and business services, leisure and hospitality, and health care.

Average hourly earnings also stayed strong, growing 0.3% on the month and 5.1% on the year, a little ahead of expectations. 

The numbers come less than a day after two senior Federal Reserve officials - governor Chris Waller and St. Louis Fed President James Bullard, both expressed a preference for raising the target range for Fed Funds by another 75 basis points this month.

"This job report does nothing to change the Fed track," said Roberto Perli, head of global policy research at Piper Sandler and a former Fed economist. "Despite a clear slowdown in job creation and wage growth recently, the labor market remains in good shape for now. This gives the Fed cover to continue to focus exclusively on bringing down inflation and remain hawkish."

U.S. stock futures fell on the news, while bond yields rose as markets interpreted the news as a green light for more monetary tightening in an economy that still appears to have plenty of momentum. By 08:55 AM ET (1255 GMT), Dow Jones futures were down 118 points, or 0.4%, while S&P 500 futures were down 0.7%, and Nasdaq 100 futures were down 1.2%. All three had been largely flat ahead of the release.

"The level of non-farm payrolls has been completely and utterly inconsistent with anything that could possibly be called a recession, as indeed has the length of hours worked," UBS Global Wealth Management's chief economist Paul Donovan had said in a morning note ahead of the release. 

Average weekly hours worked stayed at 34.5 in June. While that number has eased from a decade-high over the last year, it's still very much in line with historical averages. The unemployment rate, meanwhile, remained at 3.6% of the workforce for the fourth month in a row.

The numbers mean that the private sector has now recovered all the net job losses seen at the start of the pandemic. By contrast, government employment is still some 664,000 lower than in February 2020, the Labor Department said.


Latest comments

awesome economy. The percentage of people having to work two full time jobs is at a record.
Somehow markets like gold reacted in a funny way to this news. Indeed good news now means bad news. Wall street and greed
Kind of means that there is no recession. Just bad inflation. Stick can go up now.
in one year First--Did not meet yet!!Earn of lost,,Safe or sacrifice, believed or trusted...all FOR INDIVIDUAL..RESPECT INPRIAORITY.
Trusted and Believe=Developer and INVESTORSSAFETY FIRST(Relationship)@
According to SENSIBLE LOGICGOOD news shouod mean green market but this is Wall Street land of greed where good news means bad some articles come out today touting a bad jobs report to blind some sheep.
Today it is going to go up again, everyone thinks it will go down, but he just shows you how cheap it is. misleading misguide, mismatch.. etc, all cheap..
The "FED track" was never another 75 point hike. Jpow clearly said it won't be common and the media is twisting it like its a done deal. it will be a 50
Good ole Corn Pop as the kids call him at the pool right? You call this Good? You got to be kidding...
Cash is king!!!
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