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How Developed Market Manufacturing Shaped Up in June

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Part 8
How Developed Market Manufacturing Shaped Up in June PART 8 OF 11

June Non-Farm Payroll and Improving Confidence in the US

June non-farm payroll

The June non-farm payroll report indicated a solid improvement in the US labor market. June non-farm payroll employment in the United States (SPY)(SPXL) rose by 222,000 jobs in June 2017, compared to 152,000 jobs in May. It was far above the market expectation of 179,000 jobs.

June Non-Farm Payroll and Improving Confidence in the US

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Key highlights of the jobs report

Job growth occurred in the healthcare, mining, financial services, and social assistance sectors.

  • The healthcare (XLV) sector added 37,000 jobs in June 2017.
  • Job growth in the mining (XLB) sector added 8,000 jobs in the month.
  • Social assistance added 23,000 jobs.
  • Employment in the financial services added 17,000 jobs in the month.

Impact on the economy

The strong improvement in the US labor market (QQQ)(IWM) is improving investors’ confidence in the US economy. The Fed is continuing its gradual rate hike process, and it’s expected to continue in the near future. Improvement in labor market conditions is a positive sign for the Fed’s rate hike decision. A gradual rate hike is appropriate in the economy when it appears to strengthen.

Major central banks such as the ECB (European Central Bank), the BoE (Bank of England), and the BoC (Bank of Canada) already hinted at hawkish stances for the near future. It seems major developed countries are showing signs of gradual improvement, and the central banks want to take away monetary stimulus.

In the next part of this series, we’ll analyze the performance of the US ADP employment report for June 2017.

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