US Adds 222,000 Jobs, Unemployment Up, Wages Flat

US Adds 222,000 Jobs, Unemployment Up, Wages Flat

US Adds 222,000 Jobs, Unemployment Up, Wages Flat

$DIA, $SPY, $QQQ, $VXX

US job growth rose more than expected in June and employers increased hours for workers, signs of labor market strength that could keep the Fed on a path for a 3rd interest rate hike this year despite lagging gains in pay. 

NFPs (Non-farm payrolls) rose 222,000 jobs in June, driven by hefty gains in healthcare, government, restaurants and professional and business services sectors, the US Labor Department said Friday.

People are going back to work, and are thanking President Trump publicly.

That was the 2nd biggest payrolls increase this year and beat economists’ expectations for a 179,000 rise.

The economy also created 47,000 more jobs in April and May than previously reported.

While the unemployment rate rose to 4.4% from a 16-year low of 4.3% in May, that was because more people were looking for work, a sign of confidence in the labor market.

 

US financial markets shrugged off the anemic wage growth and investors focused on the jump in payrolls, which reinforced views that the economy regained speed in the second quarter after a lackluster performance at the start of the year.

“The overall takeaway for the growth picture is that the economy seems to have finished the second quarter with decent momentum, and fears of a sharp slowing in the third quarter should be mollified by today’s report,” said an economist at JPMorgan (NYSE:JPM) in New York.

President Donald Trump pledged to sharply boost economic growth and further strengthen the labor market by slashing taxes and cutting regulation.

 

There is optimism that the tightening labor market will soon spur faster wage growth amid growing anecdotal evidence of companies struggling to find qualified workers.

Some economists, including the Fed, believe that weak productivity is constraining wages.

Others argued soft economic growth last year hurt wages.

The Fed raised its benchmark overnight interest rate in June for the 2nd time this year.

With inflation retreating further below the Fed’s 2% target in May, economists expect another rate hike only in December.

They expect an announcement in September on starting to reduce the Fed’s $4.2-T portfolio of Treasury bonds and mortgage-backed securities.

The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, rose 1/10 of a percentage point to 62.8%.

A broad measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, rose 2/10ths of a percentage point to 8.6% last month.

US employment gains were broad in June, with manufacturing payrolls rising 1,000 after factories shed 2,000 jobs in May.

Friday, the US Major stock market indexes finished at: DJIA +94.30 at 21414.34, NAS Comp +63.61 at 6153.04, S&P 500 +15.43 at 2425.19

Volume: Trade was lite on the NYSE with 735-M/shares exchanging hands.

  • NAS Comp +14.3% YTD
  • S&P 500 +8.3% YTD
  • DJIA +8.4% YTD
  • Russell 2000 +4.3% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.38) Bullish (0.33) Neutral (0.23) Very Bullish (0.58)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Neutral (0.20) Neutral (0.17) Neutral (0.04) Bullish (0.38)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Neutral (-0.04) Neutral (-0.15) Neutral (-0.17) Neutral (0.19)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Neutral (-0.17) Neutral (0.10) Bearish (-0.32) Bearish (-0.29)

Have a terrific weekend.

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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