The government job report for June showed a dramatic recovery of the labor market with an amazing 224,000 jobs offered. This favorable report shattered the concerns that the job market began to slow down weakening the whole economic picture. At the same time, the unemployment rate stuck to 3.7%, the Labor Department stated.
This number of open positions offered in a non-farming market exceeds the optimistic expectations of 165,000 jobs offered. This is excellent news compared to the terrifying plunge marked in May with only 75,000 jobs in the market that was additionally brought down to 72,000.
The Fed was certainly expected to cut interest rates notwithstanding the June report figures. The investors were wondering whether the June job report will make the central bank consider the rate cuts later this month, and this caused the stock market to open lower.
This favorable report, however, would annihilate the expectations that the Fed could cut the interest rate for a half or a quarter of a point. As one economic expert stated, the job offers number has to plunge significantly for the Fed to take action and lower the rate, and the job market nowadays is still standing strong compared to some times before when the central bank reacted.
He also said that there was still a possibility that the Fed would loosen up the monetary policy, but they were probably going to wait until September to make this cut.
President Trump called out the central bank in his recognizable manner saying that the Fed “doesn’t know what they’re doing,” claiming, once again, that the economy would soar boosted by lower interest rates.
As the June job report showed, professional and business services led this list with 51,000 job positions offered; health care followed with 35,000, and manufacturing was at the bottom with 17,000 jobs available which is still 8,000 above this year’s average in the sector.
When it comes to the hourly wage increase rate, it didn’t come up to the expected 0.3% increase as it marked a 0.2% increase. The wages have gone up by 3.1% on the annual level, a grade below anticipated 3.2%.
As the ADP job report that appeared earlier this week offered a discouraging figure of 102,000 jobs in the private sector, the official job report managed to alleviate the grim prospects of the job market getting weaker, with 224,000 jobs available.
Tony Bedikan, the representative of the Citizens Bank, stated that the latest job report evidently proved that the U.S. economy was still capable of producing jobs for Americans as it neared the ten years of expansion. He added that this speedy recovery of the job market had shattered the hopes for lower interest rates for the time being.
We’re yet to see how the stock market is going to react to this, accompanied by other macroeconomic factors, such as the expected truce period in the trade war with China. The promising signs were sent from the most recent G-20 meeting, where China and the U.S. agreed to stop imposing additional taxes.