Fantastic Economic Number – US Continues to Hire – Equity Market Still Frothy

On July 3, 2014, another positive economic report continued to shed light towards a positive USA recovery.

288k Americans Hires V Expectations of 211k

The non-farm payroll for June beat expectations and prior estimates were revised upward. With a headline hire number of 280k for the month versus and expectation of 211k, this provides further evidence of a growing US economy … This is Fantastic and much needed news.

From our friends at Econoday

Released On 7/3/2014 8:30:00 AM For Jun, 2014
Prior Prior Revised Consensus Consensus Range Actual
Nonfarm Payrolls – M/M change 217,000 224,000 211,000 199,000  to 290,000 288,000 
Unemployment Rate – Level 6.3 % 6.3 % 6.2 % to 6.3 % 6.1 %
Average Hourly Earnings – M/M change 0.2 % 0.2 % 0.2 % to 0.3 % 0.2 %
Av Workweek – All Employees 34.5 hrs 34.5 hrs 34.5 hrs to 34.6 hrs 34.5 hrs
Private Payrolls – M/M change 216,000 224,000 210,000 195,000  to 285,000 262,000 

We have highlighted the Average Hourly Earnings Change as this is a key indicator for Janet Yellen and the FOMC is watching for their proof of economic improvement. This rate is below their comfort zone at the moment. Currently there is very little wage inflation pressure which conflicts somewhat with a higher total hire number.

Capital Market Reaction

Bonds smartly sold off somewhat on the news which leads to a higher interest rates. Equity Markets, still way ahead of themselves trudged higher albeit on VERY light volume.

Equity markets continue to stay frothy by marching ahead with the good news …. from already lofty levels.

Have a Great Day!

John A. Kvale CFA, CFP
8222 Douglas Ave # 590
Dallas, TX 75225

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