Highlights:
- Employment jumped 222k in June following upwardly revised increases in both May and April.
- Private employment rose 187k following a 159k increase in May. Public jobs jumped 35k led by higher employment at local governments — including a sizeable 14k jump in the education sector.
- The unemployment rate ticked up to 4.4% from the 4.3% cycle-low in May as labour force participation edged higher.
- Average hourly earnings rose 0.2% on a month-over-month basis and 2.5% from a year ago.
Our Take:
The 222k increase in employment in June was stronger than the ~180k expected ahead of the report, even more so including 47k worth of upward revisions to the prior two months. The unemployment rate ticked higher but only because of a 361k jump in the labour force that partially retraced a large decline in May. The 4.4% unemployment rate is still below the 4.6% the Federal Reserve views as consistent with full employment in the long-run. Unemployment is down half a percent from a year ago and double that when including sources of ‘hidden unemployment’ like discouraged workers. Wage growth has moderated somewhat year-to-date but ticked higher in June with an increasingly tight labour market arguing more gains are on the way. On balance, the labour force data continues to suggest that the economy is having little difficulty absorbing Federal Reserve rate hikes to-date and should provide additional confidence that more are warranted.
