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Job Creation Tumbles in July, Higher Unemployment Strengthens Case For Interest Rate Cuts: Is The Fed Slow On The Draw?
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Job Creation Tumbles in July, Higher Unemployment Strengthens Case For Interest Rate Cuts: Is The Fed Slow On The Draw?
Aug 2, 2024 6:01 AM

The pace of job creation slowed in July, signaling cooling labor market conditions and strengthening the case for imminent interest rate cuts as early as next month.

The U.S. economy added 114,000 jobs last month, down from the revised figure of 179,000 jobs in June, according to official data released Friday.

July Employment Situation: Key Highlights

Nonfarm payrolls came in at 150,000 last month, a slowdown of 63,000 from June, and well below the economist consensus estimate of 175,000 according to TradingEconomics.

The unemployment rate rose from 4.1% to 4.3%, contrary to expectations of it remaining unchanged.

Wage growth showed further signs of cooling, with average hourly earnings rising by 0.2% month-over-month, down from 0.3% in June and slightly below expectations.

On an annual basis, average hourly earnings were 3.6% higher compared to June 2023, down from 3.9% in June and below expectations of 3.7%.

July 2024ConsensusJune 2024
Nonfarm payrolls 114,000 175,000 179,000
(downwardly revised from 206,000)
Unemployment rate 4.3% 4.1% 4%
Average hourly earnings (m/m) 0.2% 0.3% 0.3%
Average hourly earnings (y/y) 3.6% 3.7% 3.9%

Market Reactions

Treasury yields dropped sharply on Friday as investors turned to safe-haven assets in response to escalating economic and geopolitical risks.

The U.S. dollar index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF , tumbled 0.7%.

Futures on U.S. indices traded sharply in the red, reflecting rising risk aversion in equity markets. Contracts on the S&P 500 Index were 1.6% lower at 8:35 a.m. in New York, while those on the Nasdaq 100 were 2.3% lower.

On Thursday, tech stocks, as monitored through the Invesco QQQ Trust tumbled 2.6%. The SPDR S&P 500 ETF Trust ( SPY ) fell 1.4%.

Read Now:

Wall Street Analyst Predicts End To Tech Rout: ‘Much Of The Selloff May Be In The Rearview Mirror’

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