US Payrolls: Job creation remains solid – UOB

Senior Economist at UOB Group Alvin Liew assesses the latest US labour market report.

Key Quotes

“Job creation continued with a robust pace in June for the US economy, reinforcing the pandemic recovery although it was again, not too hot a print to sound the alarm for pre-emptive Fed tightening. The US nonfarm payrolls (NFP) rose by 850,000 jobs in June, an improvement from the upwardly revised 583,000 in May (prelim Est 559,000) and well beating the Bloomberg median estimate of 720,000 jobs. That said, the latest private NFP number (662,000) was lower than the private sector ADP print of 692,000 jobs increase reported on Thu (30 Jun), a trend that persisted in the last few months. The US has now added nearly 15.6 million jobs since the COVID-19 pandemic crippled the US economy in March 2020. That said, employment level is still 7.1mn jobs below the pre-pandemic level (of Feb 2020).”

“Unemployment rate unexpectedly edged higher to 5.9% in Jun (from 5.8% in May). Nonetheless, this was still the first back-toback months of sub-6% unemployment rate since the onset of the pandemic (Mar 2020). The slight dip was despite the stronger jobs print and an unchanged participation rate of 61.6% (from May).”

“Jobs growth was again attributed mainly to the services sector (642,000) compared to the good producing sectors (+20,000). Special mention for the very strong government hiring (188,000) in Jun which was largely driven by education hires as BLS explained…”

“Despite the higher than expected jobs recreation in Jun, the market reaction was positive as it continued to view the Jun report as a “Goldilocks” jobs print – robust enough to show the US economic recovery remains on track, but at the same time, the numbers are not running overly hot to trigger the Fed to shift its current policy stance.”