Thu, July 04, 2024 at 11:54

• 

  Kang-hoon

  • Hello, Annie.

  • Today, I want to discuss the recent June US jobs report and its implications for the Federal Reserve's interest rate decisions.

  • 
• Annie

  • Hi, Kang-hoon!

  • That sounds interesting.

  • What are the key points from the report?🤔

  
• 

  Kang-hoon

  • According to Bloomberg, nonfarm payrolls increased by 190,000 last month.

  • This is a slowdown compared to previous months and indicates a cooling labor market.

• Annie

  • I see.

  • How about the average hourly earnings?

  • Did they change much?

  
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• 

  Kang-hoon

  • Yes, average hourly earnings increased by 3.9% year-over-year, which is the slowest pace in three years.

  • This suggests that wage inflation is also cooling down.

• Annie

  • Hmm, interesting.

  • What about the unemployment rate?

  • Did it change?

  
• 

  Kang-hoon

  • The unemployment rate remained at 4%, which is the highest level in more than two years.

  • 

  • This consistent rate supports the notion of a cooling labor market.

• Annie

  • So, does this mean the Federal Reserve might cut interest rates soon?

  
• 

  Kang-hoon

  • Indeed.

  • Futures markets are pricing in the possibility of rate cuts in September and December.

  • The gradual cooling in the labor market provides justification for such actions.

• Annie

  • Wow, that sounds significant.

  • What do the experts say about this?

  
• 

  Kang-hoon

  • Bloomberg economists noted that the recent rise in the unemployment rate suggests more urgency for the Fed to cut rates.

  • They believe the Fed will have enough evidence by the September meeting to start cutting rates.

• Annie

  • Got it.

  • How do the business and household surveys compare in this report?

  
• 

  Kang-hoon

  • The business survey shows stronger labor demand, while the household survey indicates a weaker labor market.

  • This discrepancy has been a point of discussion among Fed officials.

• Annie

  • That's quite a difference.

  • How did May's employment numbers look?

  
• 

  Kang-hoon

  • May saw a surprising gain of 272,000 jobs, reflecting broad gains across industries.

  • However, the June numbers are expected to align more closely with the household survey data.

• Annie

  • Interesting.

  • And what about the hourly wages in June compared to May?

  
• 

  Kang-hoon

  • Experts expect a 0.3% increase in average hourly earnings for June, following a 0.4% increase in May.

  • This would bring the annual rate of change below 4% for the first time since 2021.

• Annie

  • That sounds like good news for inflation.

  • How about the labor force participation rate?

  
• 

  Kang-hoon

  • The labor force participation rate is expected to rise to 62.6%.

  • May's decline was mainly among the 20-24 and 55+ age groups, but the prime working age participation rate reached its highest level since 2002.

• Annie

  • That's a lot of detailed information.

  • So, overall, would you say this news is good or bad for the market?

  
• 

  Kang-hoon

  • Overall, I would consider this news as a negative indicator.

  • The cooling labor market and rising unemployment rate suggest economic slowdown, which could lead to more cautious market behavior.

  • Upon comprehensive consideration, this news is perceived as a 😱Bearish.