The official employment report for June revealed a higher-than-expected growth in payrolls, the highest in ten months. June’s jobs data “demonstrated that, despite the persistent hassles caused by many businesses’ inability to obtain the staff they need, the labor market recovery has picked up momentum,” according to Wells Fargo analysts.
“In June, employers added 850K new jobs, indicating that the job recovery is on track. That was the biggest gain since August 2020, and momentum has been increasing up in the last two months.”
“The unemployment rate increased to 5.9% despite better payroll growth. The increase was due to a drop in household employment of 18K even while the labor force increased, resulting in an increase in the ranks of the unemployed. Given the erratic nature of household data month to month, the major takeaway from the spike is that, as labor supply improves, the unemployment rate will be slower to fall throughout the rest of the year, but we expect the trend will continue downward.”
“The Fed should be encouraged by today’s data. Even with existing limits, employers appear to be finding methods to increase hiring, as increased employment opportunities and remuneration among prime-age workers appear to be unlocking labor supply. However, a complete recovery will take time. We expect the labor supply to improve more significantly this fall as schools reopen for in-person learning and the impact of additional jobless benefits fades.”
“We don’t think this report will sway the Fed’s existing view on when to start tapering, even if it is a significant step toward “substantial further progress.”/n
