The U.S. non-farm payroll report presented another solid, albeit not too surprising, increase of 215K in July – again in line with market expectations. The ADP report estimated an increase of 185K jobs and the market expectations were at 224K for July. The main sectors that expanded their jobs were in retail trade, health care, professional and technical services, and financial activities. The rate of unemployment remained flat at 5.3%. Initially, the U.S. dollar rose against the Euro but since then changed direction and slipped. Gold and silver bounce back.
Not only the report came very close to market expectations, but also there were very little revisions to the previous months’ figures with a total upward revision of 14K for June and May combined.
Source: BLS
In July, the rate of U.S. unemployment is 0.9 percent points below the rate recorded in July 2014.
Moreover, the number of unemployed persons (8.266 million) declined by 33K in July compared to the preceding month. And the civilian labor force rose by 69K. So there was a modest gain in number of people participating in the labor force and a slight fall in the number of unemployed – not a big change but still a change in the right direction; the participation rate was unchanged at 62.6%.
Finally, wages slightly grew in July compared to June – the hourly earnings reached $24.99 per hour; wages are 2.1% higher than the same month back last year. So the report showed, yet again, wages remain close to a growth rate of 2% per annum.
The labor report is another solid one and shows the Fed, at least from the labor market, could keep September on the table for a rate hike (even though the market already crossed September off – was the market always right though?). I too remain skeptic about a September rate hike, even though lift off is still in the card for 2015. Another few solid job gains could tilt the scales towards raising rates. But then the Fed will have to consider the ramifications of its policy about inflation and wages – two economic indicators that haven’t budged in the past year.
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