US: A solid July employment report - Nomura

Analysts at Nomura explain that July’s employment report from US showed another strong month of nonfarm employment growth (+209k), consistent with the FOMC’s view of steady economic growth and diminishing labor force slack.

Key Quotes

“Average hourly earnings posted a 0.3% gain, bringing the y-o-y rate to 2.53%. The lack of wage growth acceleration this year, while notable, does not alter the FOMC’s intention to keep raising rates gradually, given the notion that wage inflation might react to the tightening of labor markets with a lag.”

“The unemployment rate ticked down, but just barely. The unemployment rate in June (4.357%) was just enough to round to 4.4%. July’s number (4.349%) sits just below the 4.4% rounded threshold.”

“Labor force participation increased by 0.1pp to 62.9%, remaining within the band observed over the past 18 months, and suggesting continued flows into the labor force that are strong enough to offset the declines expected from an aging population.”