The big economic news last week was Friday’s report of June’s gain in employment and wages. New non-farm jobs were up 209,000 and the unemployment rate ticked down again to 3.6%. Wages increased 4.4% over the past 12. As a result, the Fed is likely to raise its policy interest rate by ¼% at its meetings on July 25-26.
- Average hourly earnings rose by 0.4% m/m rise in June, and May’s monthly increase was revised up to 0.4% as well. The one-year gain of 4.4% is good for workers but too strong for a 2% inflation target.
- The 209,000 gains in jobs in June are less than the year-to-date monthly average and the weakest since December 2020. The gains still showed continued strength in construction hiring which ought to have been weaker or negative given the interest rate increases over the past year. April and May job gains were revised down by 110,000 combined.
- The household employment measure rose by a stronger 273,000 causing the unemployment rate to fall to 3.6%, again, near its lowest level in 50 years.
The big news tomorrow (July 11) will be the June CPI inflation rate, which is expected to fall below 4% (including food and energy) with some continued improvement in the core rate of inflation.
China’s reopening recovery is struggling for momentum, and growth for the rest of this year likely will be below expectations even as China continues to announce government financial support for its efforts to transition from an export to a consumer-based growth strategy.
- U.S. imports from China totaled $130 billion in February – May 2023 which is down 25% from the same period a year ago. For that same four-month period, U.S. exports to China are up 1% in 2023 over 2022.
- U.S. Treasury Secretary Yellen’s trip to China is aimed at preventing US-China bilateral economic and financial relationships from worsening.
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