The US economy continues to produce more jobs despite being close to full employment. The unemployment rate has remained at or under 4% since April 2018 while annual increases in hourly pay have remained above 3% for nine consecutive months. This latest employment report has surprised observers who were expecting some sort of slowdown.
According to the US Bureau of Labor Statistics, the US economy created an additional 224,000 jobs in the non-farm sector in June, considerably more than May’s revised increase of 72,000 and more than the 158,000 increase which had been expected by economists. The unemployment rate ticked up from 3.6% to 3.7% as the total number of unemployed increased by 87,000 to 5.975 million while the total number of people either employed or looking for work increased by 334,000 to 162.98 million.
US bond yields increased on the news. By the end of the day, 2-year Treasury bond yields had gained 11bps to 1.86%, 10-year yields had increased by both 9bps to 2.04% and 30-year yields were 7bps higher at 2.54%.