6min read
PREVIOUS ARTICLE ASX Cattle and Beef Stocks tha... NEXT ARTICLE Disrupted businesses are strug...

The July U.S. employment report was solid, with payrolls increasing by 255,000 and the unemployment rate unchanged at 4.9%. Today’s report marginally increases the probability that the U.S. Federal Reserve (Fed) will raise rates in September, but more importantly it is a vote of confidence for the U.S. economy at a time when some were calling its health into question.
• Payrolls increase by 255,000 in July, with strength in professional and business services, leisure and hospitality, financial services, and health care. However, mining continues to be a weak spot, with employment in the industry down 26% from its peak.
• The payroll figures for May and June were both revised higher, with May increasing by 13,000 and June increasing by 5,000. Given the particularly strong June payroll report, these upward revisions came as a welcome surprise.
• The unemployment rate was unchanged at 4.9%. Growth in the labor force was just shy of growth in the number of employed persons, which led the unemployment rate to hold steady and the labor force participation rate to tick higher.
• The work week increased modestly in July, and average hourly earnings for production and nonsupervisory workers increased by 2.6% from a year prior. This is the strongest pace of wage growth that we have seen since January 2010, and points to a labor market that is in the process of tightening.
• The U-6 rate, a broader measure of unemployment, moved slightly higher to 9.7%. This stemmed from an increase in the number of persons working part-time for economic reasons, which was larger than the decline in the number of people marginally attached to the labor force.
Today’s report shows that the U.S. economy is healthy, and increases the probability that the Fed will hike rates in September. Given the very dovish nature of the current Fed, this would require upcoming data releases to be impeccable, but the July payroll figures have made the May report feel like a distant memory. Janet Yellen’s speech in Jackson Hole later this month will be a key event for Fed watchers, as it could be used as an opportunity to prep the market for a September hike, but the risk to this outlook is that financial conditions tighten on the back of rising rate hike expectations and the corresponding dollar strength. That said, if global financial conditions remain stable, September could prove to be a more interesting month than many originally expected.
Originally plublished by David Lebovitz, J.P Morgan 

>> BACK TO THE NEWSLETTER: Click here to read other articles from this week’s newsletter

 Disclaimer
The Market Insights program provides comprehensive data and commentary on global markets without reference to products. It is designed to help investors understand the financial markets and support their investment decision making (or process). The program explores the implications of economic data and changing market conditions for the referenced period and should not be taken as advice or recommendation.
The views contained herein are not to be taken as an advice or a recommendation to buy or sell any investment in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yield may not be a reliable guide to future performance.
J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. This communication is issued by the following entities: in the United Kingdom by JPMorgan Asset Management (UK) Limited, which is authorized and regulated by the Financial Conduct Authority; in other EU jurisdictions by JPMorgan Asset Management (Europe) S.à r.l.; in Hong Kong by JF Asset Management Limited, or JPMorgan Funds (Asia) Limited, or JPMorgan Asset Management Real Assets (Asia) Limited; in India by JPMorgan Asset Management India Private Limited; in Singapore by JPMorgan Asset Management (Singapore) Limited, or JPMorgan Asset Management Real Assets (Singapore) Pte Ltd; in Taiwan by JPMorgan Asset Management (Taiwan) Limited; in Japan by JPMorgan Asset Management (Japan) Limited which is a member of the Investment Trusts Association, Japan, the Japan Investment Advisers Association, Type II Financial Instruments Firms Association and the Japan Securities Dealers Association and is regulated by the Financial Services Agency (registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Korea by JPMorgan Asset Management (Korea) Company Limited; in Australia to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Cth) by JPMorgan Asset Management (Australia) Limited (ABN 55143832080) (AFSL 376919); in Brazil by Banco J.P. Morgan S.A.; in Canada for institutional clients’ use only by JPMorgan Asset Management (Canada) Inc., and in the United States by JPMorgan Distribution Services Inc. and J.P. Morgan Institutional Investments, Inc., both members of FINRA/SIPC.; and J.P. Morgan Investment Management Inc. In APAC, distribution is for Hong Kong, Taiwan, Japan and Singapore. For all other countries in APAC, to intended recipients only.
Copyright 2016 JPMorgan Chase & Co. All rights reserved.