US hourly earnings miss expectations
Low-paid work continues to drive employment growth
The key number for the bond market in the 8:30 US employment report was lower-than-expected earnings growth. Average hourly earnings were up 0.2% rather than the expected 0.3%.
The 30-year bond had been down 12/32 before the announcement and was down only 6/32 at 8:33. The US economy just can’t seem to generate wage growth, for a number of reasons. Employment growth is concentrated in lower-paid occupations, which lower the average growth.
As Asia Unhedged noted yesterday, employment growth among the S&P 1500 companies has ground to a halt, in part because the larger companies are outsourcing employment.
Health care and social assistance dominated gains, with 59,100 jump in jobs in June. Overall job growth was 222,000 vs. an expected 178,000. Health care jobs for the most part are low-paid work, which helps explain why overall earnings growth was muted. Manufacturing and construction were flat at +9,000 jobs and +1,000 jobs respectively.