On Friday, the US Labor department released the jobs numbers for the month of June. The numbers are usually highly-anticipated because they help to show the health of the economy. The data, showed that the US economy added more than 224k jobs in the month. This was higher than the consensus estimate of 160k and the previous month’s 72k. These numbers were a sigh of relief to the market, which was worried that the economy was easing. The private nonfarm payrolls increased by 191k. This was higher than the previous 83k and the consensus estimate of 153k. Manufacturing payrolls, which are closely followed, increased by 17k.
The unemployment rate, which is a measure of the percentage of people who are out of work increased slightly to 3.7% in the month. This was a slight increase from the previous 3.6%. The weakening probably happened as the participation rate. The participation rate increased to 62.9% from the previous 62.8%. The data shows the percentage of people of working age who are actively looking for work and those who are working. The U6 unemployment rate, which is a more comprehensive measure of the unemployment rare increased slightly to 7.2% from the previous 7.1%.
These numbers came at a crucial time for the US market. In recent days, other important data like manufacturing and non-manufacturing PMIs have been easing. The same is true with the housing numbers and retail sales numbers. This has happened as the US continues with its trade wars, which have affected the sentiment in the market. As a result, the Federal Reserve has moved from having a hawkish tone to an increasingly dovish tone. Already, investors expect the Fed to lower rates in this month’s meeting. Before the jobs numbers, investors were expecting three more hikes this year. This has been reduced to two after the solid employment data.
In reaction to the jobs numbers, the US dollar index rose sharply as shown in the chart below. At the same time, the price of gold declined sharply as investors reduced the likelihood of three more hikes to two.
Meanwhile, in Canada, the economy lost more than 2.2K jobs in June. This was lower than the expected gain of more than 10K jobs. The participation rate remained unchanged at 65.7% while the unemployment rate rose to 5.7%. The Ivey PMI data declined to 52.4 from the previous 55.9. In response to the positive data from the US and the negative data from Canada, the USD/CAD declined as shown on the chart below.