The US labour market gave a boost to growth prospects for H2 as payrolls and the unemployment rate both portrayed a picture of a fast improving economy. Coming off the back of various positive alternate indicators such as ADP payrolls and the Philly fed index this should not come as a surprise. Furthermore, the CB consumer confidence figure last week alluded to the perception of an optimistic outlook for the jobs market.
Today’s announcement saw the headline unemployment rate fall to 6.1%; representing the lowest level since October 2008. Meanwhile the payrolls figure smashed expectations, rising to 288k which represents the same figure announced for April; seen by many as an outlier. In fact, it seems that we have seen a shift in what the new norm is, with figures closer to 300k than 200k expected to increase in frequency. Add to this a positive revision to last month’s figure by 7,000 people and there is no doubt that the economy is reaching a critical stage where employers feel comfortable enough with the strength of the recovery to be able to take on more workers on a regular basis.
One thorn in the foot of this release came with the announcement that average earnings on a year-on-year basis fell to 2% from the 2.1% seen last month. Meanwhile the participation rate remained steady at 62.8. It is these figures along with elements such as part time employment which is viewed as ‘slack’ within the economy and Janet Yellen will be watching closely. That being said, Yellen will be well aware of the linkages between employment and economic growth, where newly empowered employees are able to consume far, pay more taxes and reduce the amount of support they need from the government. Which can only be a good thing.
Today’s announcement saw the headline unemployment rate fall to 6.1%; representing the lowest level since October 2008. Meanwhile the payrolls figure smashed expectations, rising to 288k which represents the same figure announced for April; seen by many as an outlier. In fact, it seems that we have seen a shift in what the new norm is, with figures closer to 300k than 200k expected to increase in frequency. Add to this a positive revision to last month’s figure by 7,000 people and there is no doubt that the economy is reaching a critical stage where employers feel comfortable enough with the strength of the recovery to be able to take on more workers on a regular basis.
One thorn in the foot of this release came with the announcement that average earnings on a year-on-year basis fell to 2% from the 2.1% seen last month. Meanwhile the participation rate remained steady at 62.8. It is these figures along with elements such as part time employment which is viewed as ‘slack’ within the economy and Janet Yellen will be watching closely. That being said, Yellen will be well aware of the linkages between employment and economic growth, where newly empowered employees are able to consume far, pay more taxes and reduce the amount of support they need from the government. Which can only be a good thing.
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