PIMCO: U.S. Jobs Report
A cura di Tiffany Wilding, Managing Director e Economist di PIMCO
- What Happened? June’s U.S. Jobs report showed that 187,000 jobs were added to the economy, but downward revisions (-49k) from prior months and contracting aggregate hours (-0.1% month-over-month) confirmed the labor market is continuing to decelerate. The labor market still looks very resilient, with the unemployment rate ticking back to record lows at 3.5%, strong household employment gains, and the 3 month moving average (3mma) pace of payrolls at 218k.
- What Does It Mean? The last two reports have highlighted growing layoffs in several of the weaker sectors we’ve been monitoring. This, plus notable slowing in leisure and professional services payroll gains, has kept the headline number on top of a trend towards 0 payroll growth by year end. Meanwhile resilience in average hourly earnings was boosted by calendar effects, but the 4.9% 3-month annualized pace underscores the Fed’s complicated job as wage inflation lags price inflation.
- What Is Next? Overall this report doesn’t really change our thinking – the labor market is slowly decelerating, but we think a sharper slowdown is still ultimately necessary to keep inflation from reaccelerating next year. For the Fed, this report has to be a relief, but likely doesn’t tilt the scales one way or the other. At the last press conference, Chair Powell, suggested that the committee might hike or it might not at its September meeting. Next week’s inflation report, which we expect will continue to show more moderate inflationary trends, may be more convincing, and push the Fed to be patient and watch how the economy evolves for another meeting