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NFP surprise: 287 thousand new jobs

Market Analysis
U.S. nonfarm payrolls surged 287k in June from a revised 11k increase in May (was 38k) and 144k in April (was 123k), with a net -6k revision. The labor force rebounded 414k following declines of 458k and 362k in May and April, respectively, while household employment was up 67k from a 26k May increase.
The unemployment rate rose to 4.9% from 4.7%. Average hourly earnings edged down to 0.1% from 0.2%. The workweek was steady at 34.4. Private payrolls climbed 265k, with the goods producing sector seeing a 9k increase, while construction unchanged, with manufacturing rising 14k. The service sector added 256k, with education/health, and leisure/hospitality each rising 59k, while information was up 44k. Government jobs increased 22k. 
It seems that the currency markets aren’t putting much hope in the headline number. EURUSD dipped briefly to a support and rallied from there. It is obvious that the market participants think the headline number either isn’t a valid indicator of the US jobs market or the big fluctuation from month to month makes the number statistic itself questionable . Otherwise EURUSD would have moved significantly lower.

At the time of writing EURUSD is hovering above a support area at 1.1000 – 1.1020 and shows no signs of dropping the way it should if the US jobs market was in such a great condition this report suggests. In fact the hourly earnings dropped lower again to 0.1 after struggling to move 0.5 in the second half 2015. Over this year earnings have been dropping steadily. It seems that either the jobs number reporting isn’t reliable or the jobs now created are zero hour contract type of jobs with low pay and short duration. Hence the volatility in the numbers. These kind of jobs could come and go quickly and do not imply strong economic growth in the US.

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Janne Muta

Chief Market Analyst


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