Stick it up on the fridge... Friday we learned that the US economy added 224K new jobs in June. We'll get to why stocks fell on the good news in a sec, but here are two interesting developments we noticed:
- Manufacturing is doing its thing: Even though it's the sector most-affected by the US/China trade war, 17K jobs got created in the biz of putting things together (the most since January).
- The ironic hiring issue: Since so many Americans are getting paychecks, there's a huge demand for more workers to serve them burrito bowls, teach them to shavasana, fit them into Allbirds, etc. But with the unemployment rate close to a record low at 3.7%, finding the right available talent is tough.
Toss in a little context... and it helps understand each monthly jobs report a bit better.
- Compare it to expectations ⬆️: Economists expected 162K new jobs. We got 40% more than that in June.
- Compare it to last month ⬆️: Jobs growth plummeted in May to just 72K new jobs. We rebounded hard in June.
- Compare it to last year ⬇️: The average number of jobs added monthly over the past 3 months was 171K — that's down from the 223K we were adding during the same 3-month stretch last year. It's a sign that expansion is slowing.
It's all about the Fed's July get-together... America's central bank decides at next month's meeting what to do about interest rates — lower them to encourage borrowing and growth, or keep things put because the economy doesn't need any help (it could also increase rates, but that's not in the cards right now). Mid-trade war, investors have been expecting/hoping for the Fed to lower rates, which would be great for profits and stocks. But this strong jobs report may keep things in cruise control instead. Good news for the economy was bad-ish news for the stock market.