On the face of it, after some of the recent misses and revisions, this was a relatively tame number in terms of ‘shock value’. US non-farm payrolls increased 80K in June, not that different from the previous two months. Meanwhile the unemployment rate (calculated from the survey of households) held steady at 8.2%. However this does not mean there is much to cheer about as the labour market has clearly moved into a slower pace of expansion than was the case around the turn of the year. Back then, we saw payrolls’ growth exceed 200K for three consecutive months. The one bright spot in today’s report is the better than expected average hourly earnings numbers which rose 2.0% in June vs. the anticipated 1.7% increase. Even here though, you have to look at the wider picture which remains one of subdued growth in earnings, with most of the past year seeing earnings lag behind inflation.
In currency markets, the dollar is mostly firmer since the jobs data - apart from against the yen -with USD/JPY moving further below the 80.00 level. It’s also notable that the euro has once again borne the brunt of the selling activity, coming on top of that seen yesterday, suggesting that an attack on the 1.2288 level on EUR/USD is in sight. The question is whether this data is enough to prompt more action from the Fed. If the initial reaction is anything to go by, the market thinks perhaps not.