The #JobsReport came in at 372,000 jobs gained, the #unemployment rate at 3.6%, which was coupled with #wage growth of 5.1% year-over-year: all solid numbers in a historic context.
Still, when taken in the context of much of the #economic data coming in, last week’s #employment report reemphasized two key tenets of the economy and consequently of #investment markets: 1) the U.S., and indeed the global economy, is tangibly slowing…
…and 2) we are probably past the #employment peak and will likely witness #LaborMarket slowing in the back half of the year.
As the #economy emerges from Covid, the number of employers looking for help has been extremely high across virtually every #industry, and in virtually record amounts across industries, but we are clearly in the process of a state of change.
Indeed, the leisure and hospitality (67,000), professional and #business services (74,000) and goods-producing (48,000) sectors have displayed a decent decline in #hiring versus their 12-month averages of 134,000, 99,000, and 72,000, respectively…
...depicting a reduced need for people, with some #HiringFreezes, and for the first time in a while, tangible #layoffs across these and other industries.
We suggested last month that we had seen the last very strong #payroll print for the foreseeable future, and while last week’s number displayed the resilience of labor #markets…
…we continue to hold to the thesis of an #economy that is not only slowing, but one with many #companies increasingly uncertain as to near-to-intermediate term prospects for top line #revenues.
Further, there is also a likely tangible squeezing of their #ProfitMargins (and #earnings), which places a great emphasis on cost management and greater selectivity across hiring requirements.
Indeed, we think that we will see #JobsReports that start to disappoint, alongside of a #Fed that has indicated that #inflation-curtailment is its primary objective; with willingness to allow a “still hot” job market to substantially cool, even to the point of net job losses.
From the standpoint of #MonetaryPolicy, last week’s report is clearly strong enough to allow the #Fed to hike rates 75 bps in July and probably 50 bps in September, but the pace of #tightening should slow dramatically alongside of a tangibly slowing U.S. economy.
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