In June, US economy continued to add jobs at a robust pace of 213K from 244K in May, beating market expectations of 195K. Meanwhile, the unemployment rate rose to 4.0% in June compared to 3.8% in May as 601K applicants joined the labour force, indicating a growing confidence in the labour market.

With the overall labour market remaining healthy, we are of the view that the Fed is still on track to raise rates in September and December. However, with uncertainties of trade war is brewing, it may jeopardise the pace of Fed’s hike cycle given the tit-for-tat tariffs do pose a threat to the economic outlook.

• In June, US economy continued to add jobs at a robust pace of 213K from 244K in May, beating market expectations of 195K. Strong hiring was seen in professional and business services, manufacturing and the healthcare industry. Meanwhile, the unemployment rate rose to 4.0% in June compared to 3.8% in May as 601K applicants joined the labour force, indicating a growing confidence in the labour market.

• The labour force participation rate (LFPR) inched higher in June to 62.9% from 62.7% in May. However, the momentum in wage growth was subdued. The average hourly earnings grew moderately by 0.2% m/m in June from 0.3%m/m in May, easing some concerns over inflation pressure in the economy.

• With the overall labour market remaining healthy, we are of the view that the Fed is still on track to raise rates in September and December. However, with uncertainties of trade war is brewing, it may jeopardise the pace of Fed’s hike cycle given the tit-for-tat tariffs do pose a threat to economic outlook.

Source: AmInvest Research - 9 Jul 2018