Economic Update: The Jobs Report
The Bureau of Labor Statistics reported that Nonfarm Payrolls, which is one of the most closely followed gauges regarding the state of the economy, increased by 209K in the month of July.
The increase in the number of new jobs was below the consensus estimates for an increase of 230K and also below June’s revised 298K (May: 229K, Apr: 304K, Mar: 203K, Feb: 197K, Jan: 129K Dec: 84K, Nov: 244K, Oct: 200K, Sept: 163K August: 193K, July: 89K).
July marked the sixth consecutive month in which job growth totals exceeded 200K, a streak that has not occurred since 1997.
As usual, there were revisions to the prior two months’ reports. June’s report saw an increase of 10K from 288K to 298K while May’s job totals was also revised higher by 5K to 229K from 224K.
This means the economy created 15,000 more new jobs in the prior two months than had been previously reported.
The private sector job growth also continued to improve in July. The private sector produced 198,000 jobs, which was below the 218,000 level reported in Wednesday’s ADP report.
The nation’s Unemployment Rate rose to 6.2% in July which is up 0.1% from the 6.1% level seen in June (May: 6.3%).p>
Recall that June’s unemployment rate of 6.1% had been the lowest since September, 2008.
The Labor Force Participation Rate upticked for the month at 62.9% (June: 62.8%, May: 62.8%, Apr: 62.8%, Mar: 63.2%, Feb: 63.0, Jan: 63.0%, Dec: 62.3, Nov: 63.0%).
It should be noted that payroll totals now exceed the pre-2008 recession levels.
Next, the average number of weekly hours worked was reported at 34.5, which was in line with the expectations for 34.5 and last month’s 34.5.
Finally, the average hourly earnings of workers increased by +0.2%, which was in line with the consensus expectations for an increase of +0.2%.
Stock futures have improved dramatically on the news due to the view that the report falls in the “Goldilocks” camp. While job growth continued to improve in the month of July, the key is that the numbers were not strong enough to cause the Fed to deviate from their plans to raise rates in Q2 2015.
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