The highly anticipated nonfarm payroll data showed stronger than expected growth in June. 💪
Payrolls increased to 372,000, well above the 250,000 estimates, and average hourly earnings rose 5.1% YoY. It’s worth noting that the two previous month’s figures were revised down by 74,000 jobs, so growth is lower than the headline number showed but still good overall. 📈
The labor force shrank by 350,000 people, which is not great given the number of job openings still outweighs available workers by almost 2:1.
Fewer people willing to work and a lot of jobs equals wage inflation that’s likely here to stay. 🥵
Given that the labor market remains strong, the Federal Reserve will likely keep its foot on the pedal in its battle against inflation. Prices have yet to decline meaningfully from their 40-year highs, and the Fed has told us that they’ll continue to tighten aggressively until that comes down, even at the risk of a recession. 🧊
Our neighbors up north are also experiencing a tight labor market, paving the way for Canada’s central bank to hike 75 basis points next week.
Despite the tight labor market, not every industry or company is faring as well as the next.
For example, GameStop is firing its CFO and announcing layoffs as it looks to turn the company around. Also, Twitter is laying off recruiters as its deal with Elon Musk looks less and less likely. 👎
Overall the message is clear. There will always be exceptions to point to, but the labor market remains strong in the aggregate. 👍
P.S. speaking of Twitter, its CEO Parag Agrawal said he’s ‘willing to go to war’ to make the Elon Musk deal happen, so we’ll all be watching to see how that plays out. 👀