Taking a look at the breakdown of the report, government jobs retreated 208K, led by the unwinding of census workers as widely expected. Indeed, census employment dropped 225K, which gives reason behind the decrease in nonfarm payrolls. Moreover, the labor force contracted by 652K as confidence in the U.S. labor market continues to deteriorate. It is also worth noting that the average work week component continued its southern journey, while average hourly earnings lost 0.1 percent for the month. Looking ahead, the labor market is likely to remain weak as the federal government continues to slacken census employment. It is also worth noting that the extension of unemployment benefits was unable to get passed in the U.S. last week. All in all, the labor market in the world’s largest economy faces major headwinds going forward and the unemployment rate may rise to 10.0 percent during the second half of the year as workers re enter the labor force.
Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast
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