Tag: #EconomicData

June Jobs Report Falls Short of Forecasts

Posted on by scott.hodges

The U.S. economy added 57,000 jobs in June, the Bureau of Labor Statistics reported on July 2, well below both the consensus estimate of 115,000 and the downwardly revised 129,000 added in May. Revisions to April and May removed a combined 74,000 jobs from what had been reported for those months, further eroding a picture of a labor market that appeared more resilient on earlier readings.

A decline in the unemployment rate to 4.2% came alongside a drop in the labor force participation rate, which fell 0.3 percentage points to 61.5%, its lowest reading since March 2021. Household employment fell by 507,000 during the month, a divergence from the establishment survey large enough to complicate any straightforward reading of June conditions.

Sector results were mixed. Professional and business services led payroll gains with 36,000 new positions, followed by social assistance at 25,000 and health care at 22,000. Leisure and hospitality shed 61,000 jobs, which the Bureau of Labor Statistics attributed to weaker-than-usual seasonal hiring. Most other industries, including construction, manufacturing, and retail, were little changed. The June total was roughly in line with the 12-month average monthly gain of 36,000, even as it fell well short of near-term forecasts.

Average hourly earnings rose 0.3% to $37.64, keeping the year-over-year pace at 3.5%, with the average workweek unchanged at 34.3 hours. Markets moved quickly on the release, with futures rising and the 2-year Treasury yield falling 3.5 basis points to 4.13%, as traders reduced the probability of a rate increase at the Federal Reserve’s next meeting, scheduled for the end of July.

Consumers Post Strongest Borrowing Streak in Years

Posted on by scott.hodges

Federal Reserve data released Friday showed total consumer credit rising $20.7 billion in April, following a $22.2 billion gain in March, the strongest back-to-back monthly increase since late 2022. Both figures exceeded economist forecasts, with the April result beating a median survey estimate of $17.7 billion by roughly $3 billion. The report covers all consumer debt outside mortgages, meaning credit cards, auto loans, and student loans are all captured in the headline number.

The back-to-back nature of the gain matters more than any single month’s figure. A single strong reading can reflect timing effects or a category-specific surge, but two consecutive outsized increases suggest households are broadly and persistently willing to take on new obligations. Revolving credit, which runs primarily through credit cards, rose $10.6 billion in April, the largest single-month gain in that category in five months. Non-revolving credit, covering vehicle and education financing, added another $14.8 billion, its strongest performance in over a year.

Context for this pattern is worth noting. The last time borrowing ran this strong across two straight months, the Federal Reserve was in the early stages of its rate-hiking campaign and consumers were absorbing post-stimulus price increases by leaning on credit. The current dynamic is different in origin but structurally similar in result. Household debt service payments still run around 11.3 percent of disposable income, well below the 2007 peak, which gives the aggregate picture more room than the raw borrowing numbers alone would suggest.

What this means for the Fed’s near-term deliberations is less certain. Strong consumer credit has historically given policymakers less reason to accelerate rate reductions, since sustained borrowing appetite at current rates reduces pressure on the timing of cuts. Whether March and April represent a durable shift in household behavior or a front-loaded response to specific conditions in auto and retail markets is a question the next two months of data will start to answer.