June US NFP and unemployment rate
Overview of the US NFP:
- VSthe onsensus forecast predicts employment growth of +268,000 while the unemployment rate (U3) should remain at 3.6%.
- With rates markets pricing in another 75 basis point rate hike in July, the question for risky assets – equities, commodities – is good news or bad news?
- Will the June US jobs report change the Federal Reserve’s rate hike path? We will discuss these and other questions in the context of Non-farm payrolls in the United States in Junes report starting at 8:20 EDT/12:20 GMT. You can join live by watching the stream at the top of this note.
Good news is bad news? Or…
US recession fears continue to grow after a string of weaker than expected US data. But the message from the Federal Reserve is clear: a recession is possible, if it is not justified, if it means bringing down the highest inflation rates in several decades. There is, however, one sector of the US economy that remains resilient: the labor market.
According to a Bloomberg News survey, the US economy added +268,000 jobs in June compared to +390,000 jobs in May, with the US unemployment rate (U3) holding steady at 3.6%. The participation rate in the United States is expected to increase slightly to 62.4% from 62.3%, while the average hourly wage in the United States is expected to reach +5%y/y from 5.2%y/y.
With rates markets pricing in another 75 basis point rate hike in July, the question for risky assets – equities, commodities – is good news or bad news? In other words, would a strong US jobs report cause the Fed to adopt a more hawkish stance? On the other hand, high Fed hike odds were a big reason for a stronger US dollar, so for at least the greenback, good news for the US labor market would be, eh well, good news.
Atlanta Fed Jobs Growth Calculator (June 2022) (Chart 1)
The U.S. economy continues to make steady progress toward “full employment,” as it enjoyed before the pandemic. According to the Atlanta Fed’s Jobs Growth Calculator, the US economy needs +312,000 jobs per month over the next 12 months to return to the pre-pandemic US labor market a unemployment rate of 3.5% (U3) with an unemployment rate of 63.4%. activity rate.
We will discuss these and other questions in the context of June US Nonfarm Payrolls Report from 8:20 EDT/13:20 GMT. You can join live by watching the stream at the top of this note.
— Written by Christopher Vecchio, CFA, Senior Strategistst