Solid Job Growth Shows Ongoing Improvement to U.S. Economy
- July U.S. Payroll Employment increased by 209,000 jobs. May and June were revised up by 15,000.
- The Unemployment Rate for July ticked up inconsequentially to 6.2 percent.
- Average Hourly Earnings were essentially flat in July, and were up 2.0 percent over the last year.
- Nominal Personal Income for June was up by 0.4 percent, supported improving labor markets.
- Nominal Consumer Spending was also up 0.4 percent; 0.2 percent after inflation.
The U.S. economy added 209,000 payroll jobs in July, the sixth consecutive month of +200K job gains. This includes April and June when about 300K jobs were added. These are solid mid-cycle numbers consistent with rapid improvement in labor market conditions and ongoing moderate GDP growth. Still, today’s job’s report was not stellar, and that may be good news for equity markets. After yesterday’s selloff, today’s jobs report does not put additional pressure on the Fed to accelerate its schedule for interest rate liftoff, which would be a damper on equity markets. The average workweek for all employees was unchanged for the fifth straight month at 34.5 hours. Average hourly earnings in July increased by a penny to $24.45, and are up 2.0 percent over the previous 12 months. The unemployment rate ticked up inconsequentially from 6.1 percent to 6.2 percent. The gains in the unemployment rate came as the civilian labor force increased by a strong 329,000 in July, perhaps catching up from a very weak April number. The U-6 unemployment rate, which captures marginally attached plus under-utilized workers, ticked up to 12.2 percent.
Job growth was widespread across industries. Construction added 22,000 jobs. Manufacturing was up 28,000 jobs, boosted by gains in transportation equipment. Retail trade employment added 26,700. Financial services gained 7,000 jobs, mostly in securities/investments. Professional and business services employment increased by 47,000 jobs. Education and healthcare added 17,000 jobs, below average for that sector. Leisure and hospitality services employment was up by 21,000. Government employment increased by 11,000 jobs. The government sector was a drag on total employment through 2012 and 2013, but that is no longer the case in 2014.
June income and spending numbers were good, setting up a positive start to the third quarter. Data revisions show a stronger U.S. saving rate than previously reported. In June the personal saving rate increased to 5.3 percent.
Market Reaction: U.S. equity markets opened with gains after yesterday’s selloff. The 10-Year T-bond yield is down to 2.55 percent. NYMEX crude is down to $97.47/barrel. Natural gas futures are down to $3.80/mmbtu.
For a PDF version of this Comerica Economic Alert click here: Employment 08-01-14.