US: Jobs market remains extraordinarily strong – Wells Fargo

Data released on Friday showed the US economy added 372K non-farm payroll in June, surpassing expectations. According to analysts at Wells Fargo, the “robust gain in payrolls should squash discussions that the economy is already in a recession.” They believe the June jobs report bolsters the case for another 75 bps rate hike at the FOMC's July 27 meeting.

Key Quotes: 

“If the economy is in a recession, employers have not seemed to notice. Despite clamors that the economy may already be in a recession due to the possibility of two consecutive negative quarters of GDP growth (a view we do not share), the labor market continues to plow forward, supporting aggregate income and limiting the havoc wrought on spending by high inflation.”

“Nonfarm payrolls put up another robust gain in June, increasing by 372K. Even accounting for a net downward revision of 74K over the past two months, that still puts the number of jobs in the economy ahead of where forecasters expected it to be heading into today's report. Payrolls are now 0.3% below their pre-COVID peak, with gains remarkably steady the past three months in the narrow range of 368-384K.”

“Inflation remains paramount for the Fed, but the jobs market is also an important piece of the puzzle to the path ahead for policy as growth concerns mount. Today's report indicates that the jobs market remains extraordinarily strong. While the size of the FOMC's next move hangs primarily on this upcoming Wednesday's June CPI report, the June jobs report bolsters the case for another 75 bps hike at the July 27 meeting.”