The labour market has recovered after the addition of 287,000 new positions during June, following the May’s disappointing result. The Nonfarm Payrolls (NFP) data were released by the U.S. Department of Labour on Friday and the actual result was much stronger than the forecasts calculated by analysts prior to the report for only 175,000 new jobs.
Within the same NFP report, the Department of Labour provided its downwards revision of May’s already weak data of 38,000 to only 11,000. The U.S. unemployment rate for the same month, which is calculated by using raw data collected from a household survey, has increased to 4.9% from May’s 4.7%.
The high increase of June’s NFP data has been reflected by increases within a number of sectors. After the manufacturing sector’s decrease in job fillings in May by 16,000, job fillings during June increased by an impressive 14,000. Likewise, the retail sector has been boosted by the addition of almost 30,000 new jobs and the hospitality sector also added almost 60,000 jobs. It is estimated that May’s NFP data slump was a result of Verizon’s strike by 35,000 employees but as the strike ended, the IT sector has been increased in June by 45 new jobs.
The Department of Labour indicates that the Average Hourly Earnings for June remained almost unchanged, with an decrease of just 0.1% following May’s 0.2% increase. However the same data during the last twelve months showed an increase by 2.6%, compared to May’s 2.5% increase.
On the other side of the Atlantic, the forecasts for the EU’s economic future are not encouraging. Following the UK’s decision to leave the EU, the International Monetary Fund (IMF) has trimmed its projections for the Eurozone’s economic growth tho 1.6% and 1.4% by the end of this year and 2017 respectively. Before the UK vote the forecasts were 1.7% growth for both years. The IMF said that high unemployment and structural inefficiencies are the main factors within the Eurozone that could prevent future growth.
The EUR/USD on Friday was particularly volatile, and during the release of the NFP data report the rate fluctuated from 1.1 to 1.11 only to end Friday’s trading session with a 0.1% decrease at 1.10501. On weekly basis, the world’s most popular currency ended with losses by 0.6%.
During the early stages of the year there has been forecasts that the Federal Reserve (Fed) might proceed with an interest rate increase until July. But May’s unsatisfactory NFP data together with the recent UK referendum result to exit the EU did everything but eliminate that possibility. Friday’s report might leave room for investors to suggest that the discouraging data in recent months might just be temporary volatility within an overall growing economy. However, U.S. policymakers are likely to wait for additional confirmation of the labour market’s growth, and equally importantly the economic effects of the Brexit, before considering a rate hike in September.
Source:: U.S. labour market recovers in style