US job creation gathers speed, bottlenecks increase wage pressures

In Short

Employment grew strongly in June, but the data continue to highlight the bottlenecks which can add to wage pressures. Nonfarm payrolls grew by 850k after having expanded by 570k on average in the previous two months.

Highlights:

  • In June, employment growth was above expectations (850k versus 700k) and accelerated from the previous two months. Government employment (+188k) played a big role and sectors whose activity is reopening continued to perform very well. But input shortages curtailed employment growth in automotive.
  • Yet, the participation rate remained unchanged at a very low reading of 61.6%. Labour shortages are affecting hiring intentions: the employment component of the ISM manufacturing index came in below 50, showing that smooth job growth cannot be taken for granted.
  • Hourly wage growth rose to 3.6% yoy, with leisure posting a +10% increase. Upside pressures on inflation coming from wages may lead the Fed to a quicker withdrawal of monetary stimulus, implying the risk of a first rate hike earlier than in mid-2023. However, doves may insist to keep accommodation with clear evidence that the constraints pushing up inflation are at the same time hampering activity and employment growth.

Download the full publication below

US job creation gathers speed, bottlenecks increase wage pressures
PDF
Generali Investments logo in grey

© Generali Investments, all rights reserved. This website is provided by Generali Investments Holding S.p.A. as the holding company of the main asset management companies of the Generali Group having, directly or indirectly, the majority shareholding in the companies listed below (hereinafter jointly, “Generali Investments”). This website may contain information related to the activity of the following companies: Generali Asset Management S.p.A. Società di gestione del risparmio, Infranity, Sycomore Asset Management, Aperture Investors LLC (including Aperture Investors UK Ltd), Plenisfer Investments S.p.A. Società di gestione del risparmio, Lumyna Investments Limited, Sosteneo S.p.A. Società di gestione del risparmio, Generali Real Estate S.p.A. Società di gestione del risparmio, Conning* and among its subsidiaries Global Evolution Asset Management A/S - including Global Evolution USA, LLC and Global Evolution Fund Management Singapore Pte. Ltd - Octagon Credit Investors, LLC, Pearlmark Real Estate, LLC as well as Generali Investments CEE. *Includes Conning, Inc., Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc., Goodwin Capital Advisers, Inc. (collectively, “Conning”).