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Ahead of Wall Street

Thursday, July 2, 2015

Greece is still dominating the headlines, but the key development this morning is the June jobs report on the home front. The jobs reading was a bit on the weak side in its internals, but was overall in-line with expectations and recent trends.

The June jobs report from the U.S. government’s Bureau of Labor Statistics (BLS) came in a shade lower than expected, with ‘headline’ job gains of 223K for the month vs. the prior month’s revised tally of 254K (from 280K) and consensus estimates of about 230K. Net revisions to the preceding two months were negative, with the total for May and April revised down by a combined 60K.

The average monthly job gain over the last three months has been 221K, below the 12-month average of about 250K, but about in-line with the level for the last two years. The unemployment rate went down to 5.3% from 5.5% in May, but down from 6.7% in May 2014. The labor force participation rate was down 0.3% from the previous month at 62.6%, with this key ratio bouncing around in a very narrow range of 62.7% to 62.9% since April 2014.


The professional and business services, healthcare, retail and the financial services industries were big jobs producers this month, with oil and gas following the expected negative path and manufacturing, construction and government payrolls little changed. Mining employment fell for the 6th month in a row, down by 4K in June, bringing the year-to-date losses in this space to 71K (mining jobs were up 41K in 2014). Average hourly earnings remained unchanged from May at $24.95, up +2% from the same period last year.



The report’s somewhat weak internals notwithstanding, this is an overall reassuring-enough read on the health of the labor market. It’s not so strong that it would force the Fed to rush into tightening monetary policy, but it isn’t weak either to give them pause about their articulated course. With respect to Greece, we will have a better sense of where they stand after the Sunday referendum, which will likely determine whether they stay in the currency union or go out.

Sheraz Mian

Director of Research



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