Hello.
This is David Kelly.
I’m Chief Strategist here at JPMorgan Asset Management and I wanted to share some thoughts with you on the July Jobs report.
Overall, the report showed continued moderation in job gains. However, in an already very tight labor market, even these job gains were sufficient to nudge the unemployment rate down and allow wages to grow a little faster than would be consistent with the Fed’s 2% inflation aspirations.
Payroll job gains came in at 187,000 for the month, slightly below consensus expectations for a 200,000 gain, while revisions cut 49,000 jobs from gains for the last two months. With this morning’s data, the three-month moving average of payroll job gains fell to 218,000, its lowest reading since the onset of the pandemic.
Labor force growth was a healthy 152,000 workers. However, a 268,000 increase in total employment, according to the household survey, cut the unemployment rate to 3.5% (consensus: 3.6%), just 0.1% above its more than 50-year low of 3.4% achieved in both January and April of this year.
Average hourly earnings for all workers rose by 0.4%, a little stronger than the consensus expectation, with wages now up 4.4% year-over-year.
Apart from a slowing in payroll growth, this morning’s report showed some weakness in a 0.1 hour decline in the average workweek and a 22,000 fall in employment in the highly cyclical temporary jobs area.
On balance, U.S. labor market momentum, like the U.S. economy overall, is moderating. However, the moderation appears too moderate to allow the unemployment rate to rise much or wage growth to slow much before the end of the year. That being said, consumer inflation is likely to stay close to its current 3.0% year-over-year pace for the next few months and then decline further in 2024 as lagged inflation pressure in shelter and transportation services abates.
The July jobs report is unlikely to change the odds on any further Fed tightening – the July and August CPI reports will likely be much more important in determining whether the Fed feels the need to hike further. However, it still looks likely that 2024 will be a year of rate cuts – moderate rate cuts if the economy is able to avoid recession and more rapid cuts if today’s moderate moderation dissolves into outright recession.
Well thank you for listening. For more of our insights on jobs, inflation, the economy and investing you can check out our website at jpmorganfunds.com/insights or our mobile app “Insights” by J.P. Morgan Asset Management.
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This content is intended for information only based on assumptions and current market conditions and are subject to change. No warranty of accuracy is given. This content does not contain sufficient information to support investment decisions. It is not to be construed as research, legal, regulatory, tax, accounting, or investment advice. Investments involve risks. Investors should seek professional advice or make an independent evaluation before investing. The value of investments and the income from them may fluctuate, including loss of capital. Past performance and yield are not indicative of current or future results. Forecasts and estimates may or may not come to pass. JPMorgan Asset Management is the asset management business of JPMorgan Chase & Co. and its affiliates worldwide.
This content is intended for information only based on assumptions and current market conditions and are subject to change. No warranty of accuracy is given. This content does not contain sufficient information to support investment decisions. It is not to be construed as research, legal, regulatory, tax, accounting or investment advice. Investments involve risks. Investors should seek professional advice or make an independent evaluation before investing. The value of investments and the income from them may fluctuate including loss of capital. Past performance and yield are not indicative of current or future results. Forecasts and estimates may or may not come to pass. JPMorgan Asset Management is the asset management business of JPMorgan Chase & Co and its affiliates worldwide.