{"id":1562,"date":"2019-07-05T12:38:20","date_gmt":"2019-07-05T16:38:20","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1562"},"modified":"2019-07-05T12:38:20","modified_gmt":"2019-07-05T16:38:20","slug":"june-employment-report-3","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1562","title":{"rendered":"June Employment Report"},"content":{"rendered":"\n

KEY DATA:<\/strong> Payrolls: +224,000; Private:\n191,000; Health Care: +35,000; Manufacturing: +17,000; Unemployment Rate: 3.7%\n(up 0.1 percentage point); Wages: +0.2%; Over-Year: +3.1%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cWhen you smooth out the wild swings in job\ngains, it is clear the economy and the labor markets remain solid.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  It looks like there is lots of noise not just\non Twitter<\/em><\/strong>. The economic data continue to show lots of volatility as\nwell.  After a truly weak May employment\nreport, questions were being raised about the strength of the economy. Never\nmind.  Conditions are just fine.  Job growth was strong in June and the\nincrease was across the board.<\/em><\/strong>  The\nhealth care and professional services were the key drivers of the job gains.\nDespite all the trade problems, manufacturers added lots of workers, a real\nsurprise.  But the wild card in this report was\ngovernment, which added workers heavily after having reduced payrolls in May.<\/em><\/strong>  Look for that to unwind in July.  Similarly, there was a sharp increase in\nconstruction, a sector that was largely flat the previous two months.  <\/p>\n\n\n\n

As for the unemployment rate, it rose modestly.  The strong labor market is drawing in more\nworkers and the labor force was up as was the participation rate, so don\u2019t read\nanything into the increase.<\/em><\/strong>  The one\nmajor concern in this report was wages. Despite the low unemployment rate, wage\ngains continue to decelerate.<\/em><\/strong>  I\nseem to write that every month, as this is a trend that has been with us since\nthe increase over the year peaked in February. \nAnd, as I like to point out, without strong income increases, it is hard\nto sustain solid consumer spending.  <\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong>  This\nwas a solid report that creates issues for both the Fed and investors.  For the Fed, the members now need to have\nsome weak economic numbers to honestly argue that the economy needs help.<\/em><\/strong>\nI have warned countless times that you cannot read much into any one economic\nnumber.  But apparently, Fed Chair Powell\ndoesn\u2019t agree.  Too bad, since we are\nseeing just how volatile the data can be. \nAll this talk about the need to cut rates to help the economy simply got\nno support in June.  Job growth was solid\nand while vehicle sales may have been down a bit from the robust May pace, they\nwere still very solid.  <\/em><\/strong>The\nconsumer has not abandoned hope.  There\nare a lot of reports that will come out before the next FOMC meeting at the end\nof the month, but the big one will likely be second quarter GDP.  It could be the weakest in three years.<\/em><\/strong>  But that would not necessarily mean the\neconomy is falling apart enough for the Fed to actually start cutting\nrates.  We often get a number well above\nor below the underlying trend and this is likely to be the case.<\/em><\/strong>  It has to do with the volatility of the\ndata.  But Mr. Powell needs a soft growth\nrate to make the excuse to cut rates, since he seems to be operating on a \u201cwhat\nhave you done for me lately\u201d approach.<\/em><\/strong> The Fed looks like it is\noperating in an economic intelligence vacuum. \nWe have a Fed Chair who wobbles with every economic number.  We have a Fed bank president who wants to\ntake out some insurance by cutting rates a quarter point, which would do\nabsolutely nothing to the economy.  We\nhave a whole group of members who change their view of conditions between every\nmeeting.   And we have investors, who root\nfor weak numbers so the Fed will cut rates, rather than hope for strong numbers\nthat show growth remains solid.  <\/em><\/strong>Indeed,\nthere\nseems to be a perverse view that good is bad and bad is good.<\/em><\/strong>  Strong data raise questions about Fed cuts\nwhile weak ones confirm the beliefs that a reduction is coming.  Really? \nIs it better to have a soft economy and rate cuts than a strong economy\nand no rate cuts?  That makes no sense to\nme, as implies the Fed can fine-tune the economy.<\/em><\/strong>  The only thing a rate cut would do is\nsustain the Fed\u2019s role as drug supplier to the equity markets.  But since it appears that Fed Chair Powell\nlikes being a pusher and investors like being junkies, I suspect both roles\nwill be sustained at the end of the month.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Payrolls: +224,000; Private: 191,000; Health Care: +35,000; Manufacturing: +17,000; Unemployment Rate: 3.7% (up 0.1 percentage point); Wages: +0.2%; Over-Year: +3.1% IN A NUTSHELL:  \u201cWhen you smooth out the wild swings in job gains, it is clear the economy and the labor markets remain solid.\u201d WHAT IT MEANS:  It looks like there is lots … Continue reading June Employment Report<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1562","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1562","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1562"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1562\/revisions"}],"predecessor-version":[{"id":1563,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1562\/revisions\/1563"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1562"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1562"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1562"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}