1.763m in July non-farm payrolls beats estimates although recovery slowsOn August 7, 2020 by Thomas Belayneh
The US Bureau of Labour statistics announced non-farm payrolls growth of 1.8m in July, beating consensus expectations for 1.6m, although it suggests a slowing labour market recovery following June’s gain of 4.8m.
Markets took the news with mild positivity with S&P 500 e-mini futures moving higher by about 20bps, while yields on US 10 year treasuries rose 1bp to 0.54%.
Although July’s figure is less than the increases of 4.8m and 2.7m observed in June and May, respectively, there were a number of positives in the data, not least the unemployment rate which declined by 90bps to 10.2%, as the numbers of unemployed fell 1.4m to 16.3m.
The number of temporarily layoffs continued to decline, falling 1.3m to 9.2m in July, although it was slower than June’s decline of 4.8m to 10.6m.
Extremely encouraging, however, was the numbers who have been without jobs for 5 to 14 weeks, which declined by 6.3m to 5.2m in July, following a decline of 3.3m to 11.5m in June. However, those unemployed for less than five weeks rose 364,000 to 3.2m in July. The numbers of long-term unemployed was essentially unchanged at 1.5m.
One closely watched feature of the data – numbers employed part time for economic reasons – fell 619,000 to 8.4m in July. Although this is positive, the rate of decline appears to be slowing following the decline of 1.6m in June to 9.1m.
In terms of sectors, leisure and hospitality accounted for one-third of the NFP gains, rising 592,000 in July with food services and drinking places payrolls up 502,000.
More than half the jobs lost in food services and drinking places have now been reclaimed, although it is still 2.6m below February’s level. Jobs in retail trade also increased, rising 258,000 in July, with nearly half of the gain from a 121,000 rise in clothing and clothing accessories payrolls.
Healthcare saw 126,000 more jobs, although job losses persisted in nursing and residential care facilities, as it declined 28,000 in July, following an 18,000 decline observed in June.
Finally, manufacturing jobs increased just 26,000 in July and was led by a rise in motor vehicles and parts payrolls of 39,000, although this was offset by declines in fabricated metal products, machinery and computer & electronics, which declined 11,000, 7,000, and 6,000, respectively. Construction was essentially unchanged following combined gains of 619,000 in May & June, rising only 20,000 in July.
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