Adriaan Pask, CIO at PSG Wealth
The event
• The US unemployment rate remained unchanged at 3.60% y/y in June 2022 for the fourth consecutive month, still the lowest level of unemployment since February 2020, and meeting market expectations.
• The number of unemployed people fell by 38 thousand to 5.912 million, and employment levels declined by 315 thousand to 158.111 million.
• Non-farm payrolls increased by 372 thousand, above expectations of 350 thousand, while the labour force participation rate slightly declined to 62.20% in June 2022, from 62.30% a month prior.
• According to the US Bureau of Labour Statistics, employment increased in most sectors, with the largest gains occurring in professional and business services (74K); leisure and hospitality (67K); health care (57K); transportation and warehousing (36K) as well as manufacturing (29k).
• Click here to download the latest media release from the US Bureau of Labour Statistics.
The impact
• Wall Street rose on Friday, with the S&P 500 and Nasdaq gaining 1.50% and 2.28% respectively, as the latest employment data showed healthy employment gains. The Dow Jones Industrial Average firmed by 1.12% at 14h57 local time.
• The US 5-year Treasury yield rose to 3.12%, while the 10-year and 30-year Treasury notes rose to 3.01% and 3.24%, respectively.
• The US Dollar Index (DXY) fell against a basket of major global currencies, advancing 0.20% to 107.34 points.
• The FTSE/JSE All Share (ALSI) was 0.31% lower, with industrials being the biggest losers for the day. The rand was weaker, trading at R16.90/$ at 15h00 local time.
Labour force participation comparison between May and June 2022
The assessment
• The US labour market finds itself on a favourable trajectory as robust demand draws more people into employment that offers stable wage growth. Although employment is currently down by about 1.6 million (1%) from its pre-pandemic level, a full-circle recovery could happen in the next few months if the current pace of job growth continues.
• While an improving labour market lifts optimism that the US economy could withstand escalating headwinds from geopolitical tensions, high inflation and tighter monetary policy, we are watchful of the developments in these areas.
• The next US unemployment rate release date is scheduled for Friday, 5 August 2022
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