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Jobs Report: Hiring Heats Up In June, But Jobless Rate Rises; S&P 500 Futures Gain

The U.S. economy added back 850,000 jobs in June as hiring gained steam amid an easing of the Covid threat and push by states to get available workers off the sidelines. The unemployment rate edged up to 5.9%. S&P 500 futures rose in early Friday stock market action after the jobs report.




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Private-sector payrolls rose 662,000 in June, while government jobs rose 188,000. The unemployment rate ticked up to 5.9% from 5.8%, according to the separate household survey.

Wall Street expected the June jobs report to show a gain of 703,000 jobs overall, including 600,000 private-sector jobs. Economists expected the unemployment rate to fall to 5.6%.

Job gains for April and May were revised up by a combined 15,000. May’s initially reported 559,000 gain was revised to 583,000.

The June employment report data comes from mid-month surveys of employers and households. The more timely weekly jobless claims report suggests progress continued later in June. Initial jobless claims eased to a Covid-era low of 364,000 in the week through June 26.

The latest jobs data only partly reflect moves by about 25 states to coax reluctant workers back into the job market by ending emergency jobless benefits that are providing an extra $300 per week. Those changes only began to take effect in a handful of states by mid-June.

S&P 500, Treasury Yields React To Jobs Report

After the jobs report, S&P 500 futures rose 0.3%. The S&P 500 finished at a record closing high of 4,320 on Thursday.

Dow Jones futures rose 0.2% and Nasdaq futures 0.5% early Friday. The Dow closed about 1% off its record high, while the Nasdaq finished a hair below Tuesday’s record close.

The Nasdaq has outperformed the broad market since mid-May as the 10-year Treasury yield has retreated, despite a burst of inflation that the Fed expects to be transitory.

The 10-year Treasury yield fell 3 basis points to 1.45% before the jobs report, then traded around that level after the data.

Friday’s stronger-than-expected jobs report could push the Federal Reserve a bit closer to tapering asset purchases. The Fed next meets July 27-28.

Be sure to read IBD’s The Big Picture column after each trading day to get the latest on the stock market trend and whether investors have a green light for buying quality stocks at a proper entry point.

Jobs Report Details

The leisure and hospitality sector regained 343,000 jobs. Within that sector, food and drinking places added back 194,300 jobs, while hotels and motels hired back 75,100 workers.

Factory employment grew by 15,000. Construction jobs fell by 7,000.

Unemployment

The household survey, which is used to derive the unemployment rate, showed the ranks of the employed falling by 18,000, while the unemployed rose by 168,000. The ranks of Americans not in the labor force fell by 22,000.

According to the monthly survey of households, 9.5 million Americans are unemployed, down from 23.1 million in April 2020, but up from 5.8 million in February 2020.

Please follow Jed Graham on Twitter at @IBD_JGraham for coverage of economic policy and financial markets.

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