The July jobs report showed that hiring remained pretty solid, as employers added 187,000 payroll positions, but the prior two months' job gains were revised somewhat lower. The unemployment rate unexpectedly dipped, while wage growth showed strength. While the labor market may still be a bit too solid for the Fed, policymakers are willing to be patient as long as the recent softening in inflation holds. The S&P 500 rose modestly in early Friday stock market action after the jobs report.
Jobs Report Hits And Misses
Employment gains were just shy of Wall Street's 200,000 forecast. The private-sector added 172,000 positions, close to estimates of 175,000 after June's downwardly revised 128,000. Meanwhile, government payrolls rose by 15,000.
The average hourly wage rose 0.4% on the month, above 0.3% forecasts. Annual wage growth of 4.4% was steady vs. June but exceeded 4.2% forecasts.
The unemployment rate fell to 3.5% vs. steady 3.6% predictions.
Hiring gains in May and June were revised down by a combined 49,000 jobs. June's initially reported gain of 209,000 was revised to 185,000.
The headline job and wage figures come from the Labor Department's monthly survey of employers. The separate household survey details labor force participation, work status and the unemployment rate.
Household survey data showed the ranks of the employed rising 268,000 and unemployed shrinking by 116,000 as 152,000 people joined the labor force. The labor force participation rate, a measure of those working or actively seeking work as a share of the 16-and-up population, held at 62.x%.
S&P 500 Reaction
The S&P 500 rose 0.3% after futures initially wobbled following Friday's jobs report. The Nasdaq climbed 0.5%.
After closing at a 15-month high on Monday, the S&P 500 has slipped the past three sessions as the 10-year Treasury yield has surged higher. That probably has less to do with Fitch Ratings' downgrade of the U.S. credit rating than greater borrowing needs from Treasury, the Fed's shrinking balance sheet and higher interest rates overseas.
Through Thursday, the 10-year Treasury yield had jumped 22 basis points on the week to a nearly nine-month high 4.19%. Following the jobs report, the 10-year yield edged down to 4.15% after initially rising.
Higher long-term interest rates provide the Fed another reason to cease and desist from further rate hikes. Still, markets could be in for a period of consolidation after a huge rally. Through Thursday, the S&P 500 was still up 25.9% from its bear market closing low on Oct. 12.
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Fed Rate Hike Odds
Ahead of the jobs report, markets were pricing in just 20% odds of an additional quarter-point Fed rate hike on Sept. 20, rising to 36% for the Nov. 1 meeting.
Those odds edged lower following the jobs report.
