US NFP: Labour market continues to rebound – UOB


Senior Economist Alvin Liew at UOB Group’s Global Economics & Markets Research assessed the latest Non-farm Payrolls figures.

Key Quotes

“It was another record-making month for the US jobs market as it added an astounding 4.8 million new jobs in June… The NFP (non-farm payroll) jump again outshined the recent ADP report which saw 2.6 million job gains. These are unusual times, amidst the coronavirus (COVID-19) pandemic and the marked improvements in the labor market reflected a broad resumption of economic activity across the 50 states [of US] in June (as compared to the partial re-opening in May).”

“US unemployment rate eased by 2.2ppt to 11.1% (from 13.3% in May) even as the labor participation rate climbed higher to 61.5% in June from 60.8% in May… The other more serious issue was that the Bureau of Labour Statistics (BLS) again highlighted a persistent misclassification of a number of workers as ‘absent’ from work instead of ‘unemployed on temporary layoff’ in June… In Its June FAQ report (page 12), the BLS estimated that if the misclassification error did not occur, then the unemployment rate may be 1.2ppt higher at 12.4% in June, a much smaller margin of error when compared to March to April’s rate under-estimation at a much higher by 3-plus percentage points.”

“The private sector was almost entirely responsible for the jobs gains with 4.767 million while the government added just 33,000 jobs, after losing nearly 1.5 million jobs in April-June period due to school closures.”

“With more of lower-paying services employment returning in June, US wage growth was again distorted by the outsized job gains among lower-paid workers, which in turn put downward pressure on wage earnings. Wages declined by around 1.2% m/m in June. Compared to a year ago, wage growth remained elevated but eased to 5% y/y (from 6.7% y/y in May).”

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