Not only did US companies add more jobs than the market was expecting in the month of June (132k actual vs. 125k forecast), but job growth in May was revised up materially by 33k. Average hourly earnings on an annualized basis was also revised higher to 4 percent, which made the drop in wage growth a more tepid 3.9 percent. This means that not only do more Americans have jobs, but wages are also growing.
The economy is therefore healthy enough to keep the housing market from collapsing and justifies the Federal Reserve’s priorities of putting inflation ahead of growth. Expect interest rates to remain unchanged for the remainder of the year - this report is hawkish from both a growth and inflation standpoint. The strong number will help to pacify concerns about a slower second half and keep carry trades in play. USD/JPY, which is very sensitive to interest rates will benefit the most. With the ECB postponing a rate hike until the fourth quarter, this should also mark a near term top in the EUR/USD.
[B]Details of the Report:[/B]
[B]Change in Non-Farm Payrolls:[/B] 132k Actual, 190k Previous (Revised from 157K)
[B]Unemployment Rate:[/B] 4.5% Actual, 4.5% Previous
[B]Change in Manufacturing Payrolls: [/B] -18k Actual, -7k Previous (Revised from -19K)
[B]Average Hourly Earnings:[/B] 0.3% Actual, 0.4% Previous (Revised from 0.3%) >> Annualized rate was 3.9% prior was revised from 3.8% to 4.0%
[B]Average Weekly Hours:[/B] 33.9 Actual, 33.8 Previous (Revised from 33.9)