by Job creation, unemployment, and wage growth figures for June were a mixed bag. We maintain our expectation for one Fed rate hike this year. The US Labor Department’s employment report for June showed nonfarm payrolls rising by a strong 287,000 in June, well above consensus expectations. However, this followed a very weak number for May (11,000, revised down from 38,000). Job creation slowed noticeably in Q2 overall.Meanwhile, the unemployment rate bounced back from 4.7% in May to 4.9% in June. Although there has been a lot of volatility over the past couple of months, the US unemployment rate is exactly at the same level as at the beginning of this year.The rest of the June jobs report was also mixed. Wages rose by only 0.1% month on month in June, although on a year-on-year basis, wage increases picked up slightly from 2.5% in May to 2.6% in June. Aggregate weekly payrolls (a proxy for household income) were rather disappointing overall in Q2.All in all, today’s employment report was reassuring in terms of job creation, but mixed in other aspects. The weak May nonfarm payrolls figure was followed by a strong figure for June. However, a noticeable slowdown in job creation was recorded over Q2 as a whole. Moreover, although very volatile recently, the unemployment rate seems to have stopped declining this year.
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Job creation, unemployment, and wage growth figures for June were a mixed bag. We maintain our expectation for one Fed rate hike this year.
The US Labor Department’s employment report for June showed nonfarm payrolls rising by a strong 287,000 in June, well above consensus expectations. However, this followed a very weak number for May (11,000, revised down from 38,000). Job creation slowed noticeably in Q2 overall.
Meanwhile, the unemployment rate bounced back from 4.7% in May to 4.9% in June. Although there has been a lot of volatility over the past couple of months, the US unemployment rate is exactly at the same level as at the beginning of this year.
The rest of the June jobs report was also mixed. Wages rose by only 0.1% month on month in June, although on a year-on-year basis, wage increases picked up slightly from 2.5% in May to 2.6% in June. Aggregate weekly payrolls (a proxy for household income) were rather disappointing overall in Q2.
All in all, today’s employment report was reassuring in terms of job creation, but mixed in other aspects. The weak May nonfarm payrolls figure was followed by a strong figure for June. However, a noticeable slowdown in job creation was recorded over Q2 as a whole. Moreover, although very volatile recently, the unemployment rate seems to have stopped declining this year. And monthly wage growth for June surprised on the downside, even wage increases picked up slightly on a year-on-year basis.
In light of this mixed report and the uncertainty regarding the implications of Brexit, we don’t see any reason to modify our scenario for US economic growth and monetary policy. We continue to expect 2.5% GDP growth in Q2 2016 and 1.8% on average in 2016. We still forecast that the Fed will hike rates once this year, most probably in December.