After yesterday’s shockingly bad ADP print of negative 33K, the market was braced for the worse, with the whisper number for today’s payrolls sliding to 96K, the first sub 100K print and far below the consensus of 106K, and many even contemplating how to trade a stagflationary recession print. In the end, it turned out to be just another headfake by ADP which now has the same credibility as UMich, because moments ago the BLS published a blowout job report: in June, the US added 147K payrolls, blowing away the median estimate of 106K, and higher than the upward revised May print of 144K.
There was just one economist who predicted a higher number among the 79 polled by Bloomberg who expected a higher print: that was Derek Holt at Scotiabank with 160K. Everyone else was below 147K.
Remarkably, and in a dramatic change from the Biden tradition, previous months were revised higher: April was revised up by 11,000, from +147,000 to +158,000, and the change for May was revised up by 5,000, from +139,000 to +144,000.
It wasn’t just the headline print that surprised to the upside: perhaps an even bigger surprise was the unemployment rate which dropped from 4.2% to 4.1%, denying expectations of an increase to 4.3%, and far below the Fed’s recently upward revised estimate of a 4.5%.
Among the major worker groups, the unemployment rate for Blacks (6.8 percent) jumped in June to the highest in 4 years, while the rates for adult women (3.6 percent) and Whites (3.6 percent) decreased. The jobless rates for adult men (3.9 percent), teenagers (14.4 percent), Asians (3.5 percent), and Hispanics (4.8 percent) showed little or no change over the month.
The drop in the unemp rate was the result of a 93K increase in employed workers, offset by a decline in the civilian labor force to 173,380K from 170,510K and a drop in the number of unemployed workers from 7,237K to 7,1025K.
There was more good news for the inflation-panicking Fed: average hourly earnings rose just 0.2% MoM, below the 0.3% expected, and down from 0.4%, while the annual earnings growth was 3.7%, down from a downward revised 3.8%, and below the 3.8% estimate.
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