The American labor market continued its deliberate improvement in June creating 195,000 jobs for the second month in a row while the unemployment rate lingered at 7.6%. Economists had forecast 165,000 new positons and a drop to 7.5% unemployed.
The dollar and Treasury yields strengthened as markets heightened their speculation that the Federal Reserve may begin reducing its quantatitive easing purchases as early as September.
The yield on the benchmark generic 10-year Treasury had gained 20 basis points or 7.79% to 2.70% as of 10:25 in New York. The euro was trading at 1.2830 at 10:20 am having opened at 1.2890 just before the 8:30 am release. Equities were flat with the Dow and the Nasdaq within a few points of their open and the S&P 500 up just under 0.5%.
Revisions were also a source of strength with the April's total jobs adjusted by 50,000 to 199,000, while the May count added 20,000 to 195,000.
Average hourly earnings jumped 0.4% in June, far ahead of May's 0.1% gain. Analysts had predicted a 0.2% increase. Yearly earnings advanced 2.2% adding 0.2% to the May increase. 2.2% Average weekly hours were unchanged at 34.5, as they have been for three months.
Despite the generally good market reception of the report the quality of jobs was less than inspiring.The largest number of jobs, 75,000, were in food service and bartending, employment that traditionally booms in the summer. Professional and business services was the second-best growth area, adding 53,000; retail grew 37,000. Manufacturing jobs declined for the fourth straight month falling 6,000.
Chief market Strategist
Chart: FX Street