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Monday, August 8, 2022 9:49:09 PM EDT

Nonfarm Payrolls Updated 05-Aug-22 09:27AM ET

The details of the July employment report reflect a strong labor market... a tight labor market... an employment picture that looks downright rosy. In other words, the knee-jerk perspective is that it is bad news for the stock market.

Average hourly earnings were up 5.2% year-over-year, hiring activity was broad based, the unemployment rate hit 3.5%, and -- this is the potential inflation kicker -- the labor force participation rate fell to 62.1% from 62.2%, meaning employers still face a shrinking pool of available workers.

July nonfarm payrolls increased by 528,000 ( consensus 250,000). The 3-month average for total nonfarm payrolls increased to 437,000 from 384,000. June nonfarm payrolls revised to 398,000 from 372,000. May nonfarm payrolls revised to 386,000 from 384,000.

July private sector payrolls increased by 471,000 ( consensus 200,000). June private sector payrolls revised to 404,000 from 381,000. May private sector payrolls revised to 331,000 from 336,000.

July unemployment rate was 3.5% ( consensus 3.6%), versus 3.6% in June. Persons unemployed for 27 weeks or more accounted for 18.9% of the unemployed versus 22.6% in June. The U6 unemployment rate, which accounts for unemployed and underemployed workers, held steady at 6.7%.

July average hourly earnings were up 0.5% ( consensus 0.3%) versus an upwardly revised 0.4% increase (from 0.3%) in June. Over the last 12 months, average hourly earnings have risen 5.2%, unchanged from the 12 months ending in June.

The average workweek in July was 34.6 hours ( consensus 34.5), versus an upwardly revised 34.6 hours (from 34.5) in June. Manufacturing workweek was unchanged at 40.4 hours. Factory overtime increased 0.1 hour to 3.3 hours.

The labor force participation rate decreased to 62.1% from 62.2% in June.

The employment-population ratio increased to 60.0% from 59.9% in June.

The key takeaway from the report is that it squashes the friendly notion that the Fed can turn friendly with its monetary policy decisions sooner rather than later. There is a lot of ground to cover still before we get to 2023, but if a tight labor market is seen by Fed Chair Powell as a risk factor for perpetuating wage-based inflation pressures, the July employment report didn't change that perspective.
Establishment Survey
Nonfarm Payrolls528K398K386K368K398K
Retail Trade22K22K-44K0K-23K
Temporary help10K4K5K-11K8K
Average Workweek34.634.634.634.834.6
Production Workweek34.
Factory Overtime4.
Aggregate Hours Index0.4%0.3%0.3%0.3%0.0%
Avg Hourly Earnings0.5%0.4%0.4%0.3%0.5%
Household Survey
Household Survey
Civilian Unemp. Rate3.5%3.6%3.6%3.6%3.6%
Civilian Labor Force-63K-353K330K-363K418K
Civilian Employed179K-315K321K-353K736K
Civilian Unemployed-242K-38K9K-11K-318K