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The US Labor Department June jobs report Friday added  224,000 NFP jobs much higher than expected 158,000 after adding just 71,000 NFP jobs last month. Unemployment rose to 3.7% just off the lowest since December 1969 as the Participation rate rose to 62.9%

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June 2019 U.S. Employment Report

The Fed Chair Powell came out with a more dovish tone as expected at the last FOMC following market fatigue from the trade wars and the resultant uncertainty. There has been an ongoing campaign by US Presdent Trump calling for lower rates and criticising the Federal Reserve for raising in the past year.  Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. In February American wages hit their highest levels in a decade at 3.4%, but has fallen back to 3.1% in May.

The market expected the June report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of  158,000 new jobs, it came in much higher than expected last month at 224,000. Logic suggests a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Unemployment is near a 49 year low with higher participation and the two month NFP revision was -11,000 change to jobs last month.

However, the combination of weaker PMI readings and skill shortages amid a low unemployment rate of 3.7% pose downside risks. More important could be the earnings data, which missed expectations in April and May. Any further cooling of pay growth would raise the odds of the FOMC’s next policy change being a rate cut.

US Jobs June 2019

Employment:

  • Non-farm payrolls 224k vs +158K expected, Prior 72K (revised from 75K)
  • Unemployment rate 3.7% vs 3.6% expected/prior
  • Participation rate 62.9% vs 62.8% expected.prior (63.2% highest since 2014)
  • Underemployment rate  vs 7.1 % prior
  • Two month net revision -11k  vs Prior -75K
  • Manufacturing payrolls +17k vs +4k Prior ( April was first loss since Oct 2016)
  • Private payrolls 191k vs 90K Prior, expected

Wages:

  • Average hourly earnings +0.2% m/m v +0.2%/+0.3% m/m Prior/Expected
  • Average hourly earnings + 3.1% y vs 3.2% exp, Prior 3.1% y/y

US Jobs June 2019 Earnings by Industry

Household Survey Data

Both the unemployment rate, at 3.7 percent, and the number of unemployed persons, at 6.0 million, changed little in June.

Among the major worker groups, the unemployment rates for adult men (3.3 percent), adult women (3.3 percent), teenagers (12.7 percent), Whites (3.3 percent), Blacks (6.0 percent), Asians (2.1 percent), and Hispanics (4.3 percent) showed little or no change in June.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.4 million in June and accounted for 23.7 percent of the unemployed.

The labor force participation rate, at 62.9 percent, was little changed over the month and unchanged over the year. In June, the employment-population ratio was 60.6 percent for the fourth month in a row.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 4.3 million in June. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. 

In June, 1.6 million persons were marginally attached to the labor force, little different from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 425,000 discouraged workers in June, little changed from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force in June had not searched for work for reasons such as school attendance or family responsibilities.

US Jobs June 2019. Industry

Establishment Survey Data

Total nonfarm payroll employment increased by 224,000 in June. Employment growth has averaged 172,000 per month thus far this year, compared with an average monthly gain of 223,000 in 2018. In June, notable job gains occurred in professional and business services, in health care, and in transportation and warehousing.

Professional and business services added 51,000 jobs in June, following little employment change in May (+24,000). Employment growth in the industry has averaged 35,000 per month in the first half of 2019, compared with an average monthly gain of 47,000 in 2018. Employment in health care increased by 35,000 over the month and by 403,000 over the past 12 months.

In June, job growth occurred in ambulatory health care services (+19,000) and hospitals (+11,000). Transportation and warehousing added 24,000 jobs over the month and 158,000 over the past 12 months. In June, job gains occurred among couriers and messengers (+7,000) and in air transportation (+3,000). Construction employment continued to trend up in June (+21,000), in line with its average monthly gain over the prior 12 months. Manufacturing employment edged up in June (+17,000), following 4 months of little change. So far this year, job growth in the industry has averaged 8,000 per month, compared with an average of 22,000 -3- per month in 2018.

In June, employment rose in computer and electronic products (+7,000) and in plastics and rubber products (+4,000). Employment in other major industries, including mining, wholesale trade, retail trade, information, financial activities, leisure and hospitality, and government, showed little change over the month.

In June, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.90, following a 9-cent gain in May. Over the past 12 months, average hourly earnings have increased by 3.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $23.43 in June.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in June. In manufacturing, the average workweek edged up 0.1 hour to 40.7 hours, while overtime was unchanged at 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls held at 33.6 hours.

The change in total nonfarm payroll employment for April was revised down from +224,000 to +216,000, and the change for May was revised down from +75,000 to +72,000. With these revisions, employment gains in April and May combined were 11,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 171,000 per month over the last 3 months. 

The Employment Situation for July is scheduled to be released on Friday, August 2, 2019, at 8:30 a.m. (EDT)

Other US June Employment Component Releases

US June ADP Job Report

  • ADP June US employment +102K v +140K expected, Prior +27K (revised to +41K)
  • Goods producing -15K
  • Service producing +117K
  • Small -23K
  • Medium +60K
  • Large +65K

ADP JUne 2019

US June Challenger Job Cuts

Challenger Jobs 7 2019

2019 June Job Cut Report: Challenger Report Shows Highest First-Half Total Since 2009

Released by Challenger, Gray, and Christmas Inc -3 July 2019  

  • US June Challenger job cuts +12.8% vs +85.9% y/y prior
  • Layoffs 41.98k Prior 58.58k

U.S.-based employers announced plans to cut 140,577 jobs from their payrolls in the second quarter of this year, down 26% from the 190,410 cuts announced in the first quarter. Despite the drop, Q2 cuts are 34% higher than the 104,800 cuts announced in the same quarter last year, according to the latest report on job cuts released Wednesday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.

Last quarter’s total is the highest for the second quarter since 2015, when 147,458 cuts were recorded. So far this year, employers have announced plans to cut 330,987 jobs, a 35% increase from the 245,179 cuts announced through the first half of last year. This year marks the highest first-half total since 2009, when 896,675 job cuts were announced.

“The second quarter is historically the slowest period for job cut plans. Companies typically have not determined staffing decisions by this point, either because they are in the middle of or are only approaching their fiscal year’s end by June,” said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc. Employers announced 41,977 cuts in June, down 28% from the 58,577 cuts announced in May. Despite the monthly drop, June’s cuts are 13% higher than the 37,202 cuts announced in June of last year. This is the eleventh consecutive month job cuts are higher than the corresponding month the year prior.

“Job cuts are trending higher overall. In addition to Retail, we’ve seen significant cuts in the Industrial Manufacturing and Automotive sectors in recent months,” said Challenger. Retail continues to lead all sectors in 2019 with 53,248 cuts, 7,187 of which occurred in the second quarter. That is 27% fewer cuts than the 73,066 announced in the first half of 2018. Companies in the Industrial Goods sector have announced 47,651 cuts, 562% higher than the 7,194 announced through June of 2018.

Meanwhile, Automotive makers and suppliers announced plans to cut 32,350 jobs through June, a 190% increase over the 11,165 cuts announced in the first six months of 2018. “Manufacturers are grappling with not only technological changes, but also increased competition, tariffs, changes in consumer behavior, and skills shortages. The Automotive sector particularly has experienced some setbacks, as consumer demand for traditional vehicles wanes,” said Challenger.

Companies in the Technology sector announced 21,777 job cuts through June, up 266% from the 5,942 cuts announced in the same period last year. Energy sector job cuts are up 185% over last year, with 14,527 cuts so far this year compared to 5,088 announced through June 2018. Related source: imgur.com Cuts in the Media industry continue to take their toll on news organizations. Through June, Challenger has tracked 7,775 media cuts, over 3,600 of which occurred at news outlets. That’s compared to 6,435 media cuts through June 2018.

Last year ultimately saw 15,474 job cuts in the media, with 11,878 occurring in news, according to Challenger tracking. The biggest blow to the news media last month came from the closing of the Youngstown Vindicator in Ohio, costing 144 employees and an estimated 250 carriers their jobs.

Note: Challenger has updated the names of two industries to better describe the companies that are tracked therein. “Computer” will now be labeled “Technology” and “Commodities” will now be called “Mining.” Challenger is also breaking out Financial Tech firms, which will be referred to as “FinTech.” These changes are represented in Table 2 (Job Cuts by Industry) and Table 7 (Announced Hiring Plans).

US Weekly Jobless Claims week ending June 29 2019

  • US initial jobless claims 221K versus 223K estimate. Prior week revised higher to 229K vs 227K
  • Four-week average 222.25K versus 221.75K, 4 week average 1686.5K vs 1688.25K last week
  • Continuing claims 1686K versus 1675K estimate. Last week 1688K revised higher to 1694K

The largest increases in initial claims for the week ending June 22 were in California (+5,643), New Jersey (+5,580), Massachusetts (+4,660), Connecticut (+3,719), and Maryland (+1,742),

The largest decreases were in Pennsylvania (-947), Illinois (-738), Puerto Rico (-640), Texas (-587), and New York (-504).

Source: AFP, Challanger, DOL, TradersCommunity Data, BLS

From The TraderCommunity Research Desk

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