The July employment reports from the U.S. and Canada were as highly anticipated as the latest Game of Thrones episodes, so let’s take a look at how the jobs battle turned out.
The July non-farm payrolls report printed a 209K increase in hiring, much stronger than the estimated 187K gain. To top it off, the previous reading was upgraded from the initially reported 222K rise to 231K.
This was enough to bring the unemployment rate down from 4.4% to 4.3%, right smack in the middle of the Fed’s median forecast for the year. Labor force participation was slightly higher at 62.9% in July, chalking back-to-back monthly gains. This reflects how jobseekers remain confident in hiring opportunities and how employers are able to match jobs demand.
Wage growth was also evident as average hourly earnings rose by 0.3% as expected, slightly stronger than the earlier 0.2% uptick and marking its strongest increase in five months. On a year-over-year basis, this amounts to a 2.5% rise in wages, keeping consumer spending supported and likely putting upward pressure on inflation down the line.
A closer look at the components of the latest jobs report also reveals that the gains were broad-based across different industries. Although the May NFP reading suffered a downgrade from 152K to 145K, the revisions still amounted to a net gain of 2K from the initial estimates.
Of course the Donald didn’t pass up the chance to claim his victory by tweeting:
Excellent Jobs Numbers just released – and I have only just begun. Many job stifling regulations continue to fall. Movement back to USA!
— Donald J. Trump (@realDonaldTrump) August 4, 2017
Canada’s headline employment change reading was weaker than expected at 10.9K, even though analysts already set the bar pretty low at a consensus of 13.1K for July. This is significantly lower compared to the earlier 45.3K increase in hiring for June.
However, underlying data indicated that full-time employment surged by 35.1K in July and that the overall loss was spurred by a considerable 24.3K drop in part-time hiring, so there were still some green shoots.
The unemployment rate “improved” from 6.5% to 6.3% instead of holding steady as many expected, but reviewing the components shows that this was mostly due to weaker labor force participation. The rate dropped a couple of notches from 65.9% to 65.7% to suggest that Canadians may be leaving the workforce to give up on their job hunt.
Wage growth wasn’t promising either, with average hourly earnings down 0.35% in July after falling flat in the previous month. Even though wages are still up 1.30% on a year-over-year basis, the lack of growth could keep a lid on spending and price levels in the coming months.
With that, it’s no surprise that the Greenback outlasted the Loonie in Friday’s U.S. trading session as market watchers sustained rate hike expectations for the Fed while paring BOC tightening bets. Do you think these numbers would be enough for USD/CAD to erase or at least retrace its losses since May?