Revisions to the previous two months were minimal, so the figure can be taken more or less at face value
7th July 2014
US non-farm payrolls rose 288K in June, exceeding consensus expectations (215K, ING 220K), though in line with the strong ADP reading (281K).
Revisions to the previous two months were minimal at +29K, so the headline figure can be taken more or less at face value.
Further, there was no massive discrepancy with respect to the household survey of employment, which showed a 407K increase. Although much higher, this is a volatile survey, and viewed as a smoothed series, does appear to support the stepped up gains in employment suggested by the latest payrolls figures.
The labour release also provided another positive outcome for the unemployment rate, which fell a further 0.2pp to 6.1%.
And wages growth, whilst down a touch at 2.0%YoY in June from 2.1%YoY in May, grew again at a 0.2% rate, and the annual rate should begin to drift up to 2.4-2.5% over the coming months as base effects cease to weigh on annual growth rates. Broader measures of the unemployment rate also fell, and labour force participation remained unchanged, which makes it easier not to write off any of these results as a quirk of participation volatility.
Still, without a clear step up in wages, and whilst the unemployment rate remains 6-something percent, we suspect the Fed will be loathe to change its formal stance with respect to the taper, or to the possibility of normalising rates. The time is soon coming that the FOMC will have to change its tack with respect to its policy stance, and forward guidance.
The latest release takes us a little closer to that point, but as FOMC chair Yellen’s recent testimony shows, they are not there yet.
Source: ING