Announcement of last week’s employment data shows that the U.S. labour market is recovering in style
Here’s What Happened on Friday
The non-farm payroll came out showing the addition of 287,000 new jobs in June, an impres-sive result following May’s disappointing result.
The NFP, released by the U.S. Department of Labour, outstripped analysts forecasts of only 175,000 new jobs.
Within the same NFP report, May’s surprisingly disappointing figure of 38,000 was revised even further downwards to just 11,000.
The U.S. unemployment rate for the same month, which is calculated by using raw data col-lected from a household survey, also increased to 4.9% from May’s 4.7%.
On the other side of the Atlantic, the forecasts for the EU’s economic future are not encourag-ing.
Following the UK’s decision to leave the EU, the International Monetary Fund has trimmed its projections for the Eurozone’s economic growth.
Before the UK vote, forecasts for this year and 2017 were at 1.7% each but have been reduced to 1.6 and 1.4 percent respectively
The IMF said that high unemployment and structural inefficiencies are the main factors within the Eurozone that could prevent future growth.
So what’s next?
Earlier this year, forecasts were that the Fed might proceed with an interest rate increase by July.
But May’s unsatisfactory NFP data together with the recent UK referendum result to exit the EU did everything but eliminate that possibility.
Last Friday’s labour report might suggest that the discouraging data in recent months is just temporary volatility but that overall the US economy is strengthening
However, U.S. policymakers are likely to wait for additional confirmation of the labour market’s growth, and equally importantly the economic effects of the Brexit, before considering a rate hike in September.
We’re living in interesting times right now with uneven global markets. Lots of opportunities but al-so lots of risk. So take care out there.
