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Staff of Reuters 7 Minutes to Read (Reuters) – NEW YORK (Reuters) – In June, job growth in the United States increased as businesses, frantic to improve production and services in the face of rising demand, upped wages and offered incentives to entice millions of unemployed Americans back into the workforce. PHOTO FROM THE FILE: On May 8, 2020, a “Now Hiring” sign for a hand vehicle wash is visible along a street in Miami, Florida, United States. Marco Bello/REUTERS The Labor Department said in its widely awaited employment report on Friday that nonfarm payrolls climbed by 850,000 jobs in June after expanding by 583,000 in May. The unemployment rate increased to 5.9% in June, up from 5.8% in May. REACTION OF THE MARKET: STOCK FUTURES: S&P e-mini futures were up 0.27 percent, indicating to a higher open on Wall Street. BONDS: The yield on the benchmark 10-year note fluctuated and ended the day at 1.436 percent. The yield on a two-year Treasury decreased to 0.242 percent. FOREX: The dollar index is now down 0.16 percent. WELLS FARGO WEALTH & INVESTMENT MANAGEMENT, NEW YORK, DARRELL CRONK, CIO “This was a goldilocks report in terms of capital markets, equities, and bonds. It was powerful but not overpowering, which is exactly what they intended. If you got a particularly strong report, the market might have reacted negatively, implying that the Fed can’t wait two years to hike interest rates. There would have been fears, which would have pushed the Fed forward. This was ideal. There were enough jobs that you’d want to see, but not so many that people are worried the Fed may have to act sooner than expected.” “The turnout appears to be high. It has remained stable month after month, but there is indication that people are returning.” The story line is that we’re seeing exactly what we expected, with the services sector re-engaging as the economy improves. That’s fantastic news. At this point in the recuperation, that’s exactly what we want.” “Wages were generous… It’s starting to take shape. In terms of wage inflation pressure, I don’t believe we’ve yet reached the pinnacle.” “Until now, the economy has been propelled mostly by the industrial and commodities sectors. Services have been shut off since retail, restaurants, and travel haven’t met our expectations. As this is reactivated, wages will be put under strain.” “In terms of wages, there is still rising pressure on the horizon. What’s going on in pay, behind the headline jobs statistic, is the first thing that comes to mind.” SEAPORT GLOBAL HOLDINGS, NEW YORK, TOM DI GALOMA, MANAGING DIRECTOR “The nonfarm payroll number was better than expected, but the unemployment rate increased slightly, which has people perplexed.” “Because we were already at lower levels before the news came out, the (US Treasury) market is fighting to go to lower yields. After the release, the market spiked, but it can’t seem to drop below 1.42 percent (on 10-year rates) “(Observe.)” “The restaurant industry and education accounted for the majority of the gains. As educators returned to work in the fall, the unemployment rate dropped significantly. I believe we’re on track for a successful reopening, but the majority of it will take place in the fall.” VASSILI SEREBRIAKOV, UBS NEW YORK, FX STRATEGIST “The FX market had been anticipating a higher number all week, as evidenced by the dollar’s gain. As a result, I believe the bar for a favorable surprise was raised. The headline, which was stronger than expected, elicited a good response at first. The stock then fell due to some of the report’s negative elements, such as the higher unemployment rate and the higher bar for a good surprise.” “We’re heading in the right path, overall. The job market in the United States is robust. It remains to be seen how rapidly slack in the labor market can be eliminated. However, at UBS, we believe there is more slack than appears at first look. We anticipate that more people will enter the job field in the following months, lowering the unemployment rate gradually.” JJ KINAHAN, CHICAGO-BASED CHIEF MARKET STRATEGIST, TD AMERITRADE “Overall, that was clearly a really positive number.” “This clearly shows that the pace of reopening things is quite consistent, which is exactly what we want to see so that salaries don’t get too hot and some of the inflation anxieties are alleviated, given the fact that the average hourly pay hasn’t changed much month to month or year to year. Even while we know those folks are presumably getting paid better than they were before all of this, the fact that we had so many restaurant and bar jobs is still a lower wage than construction, which was flat again last month.” NATIXIS, NEW YORK, JOSEPH LAVORGNA, AMERICAS CHIEF ECONOMIST “The jobs economy is improving, according to the headlines. There is still a lot of slack; the only difference is that there is no pay pressure.” The job market appears to be doing well, and it is trending in the right way. There’s certainly a lot of work to be done, but the labor market and the broader economy will be fine if left to their own devices at this time.” I’d also say that the data we got makes it less likely that you’ll get fiscal stimulus because people will be more focused on the headline, and why should the government do more if things are getting better and you’re generating large job gains?” PRIYA MISRA, TD SECURITIES, NEW YORK, HEAD OF GLOBAL RATES STRATEGY “Higher front-end rates (on US Treasuries) should have followed a better report, but they didn’t last. I believe the market is divided between pricing in the market outlook and the Fed’s response.” “If the data is better, higher rates should be expected, but if the Fed is obliged to withdraw sooner, the economy will be slowed.” “Some strange dynamics are being created by the interaction between the economic outlook and the Fed reaction function.” CUNA MUTUAL GROUP, MADISON, WISCONSIN (email) STEVE RICK, CHIEF ECONOMIST “The fact that this jobs data exceeded forecasts is yet another encouraging indicator. With continued rapid vaccine rollout and largely successful reopening efforts taking place across the country, cautious optimism appears to be warranted. The road ahead appears promising as we slowly return to the robust 3.5 percent unemployment rate and pre-pandemic labor market conditions “itations” Furthermore, since March 31st, household net worth in the United States has climbed by $25.6 trillion, bringing the total to $136.9 trillion. While this may be welcome news for some, there is substantial evidence that the growth in household net worth benefited mostly the wealthy, as the majority of these gains came from stock and real estate holdings, both of which are held by the majority of well-off white households. These optimistic figures are meaningless without initiatives to assist individuals who are unable to participate in market upswings.” The worldwide Finance & Markets Breaking News team contributed to this article./nRead More

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