US labor market: Good on the inside - Commerzbank

At first glance, the situation seemed clear. With 147,000 new jobs created, the US labour market proved more robust than most analysts had expected - in fact, only one analyst in a Bloomberg survey had predicted even more new jobs. The unemployment rate also fell from 4.2% to 4.1%. However, it must be said that there were one or two weaknesses to be found in the details, Commerzbank's FX analyst Volkmar Baur notes.

Weaknesses are therefore evident in the labour market

"In the end, we are left with the same conclusion we had before. On the surface, the labour market still looks good. But beneath the surface, things are starting to rumble. This was already evident in this week's JOLTS report. Although the number of job vacancies increased, the hiring rate and the resignation rate remain too low, especially given the low unemployment rate. However, the hiring rate and the termination rate remain too low, especially considering the low unemployment rate."

"The labour market has therefore lost momentum. This also means that, although it is currently a good time in the US to be already inside the labor market if you already have a job. However from the outside, if you want to change jobs or are currently looking for one, the situation looks much worse. School leavers are feeling this particularly keenly. In the 18-19 age group (the age at which most people finish high school), unemployment rose to 15.1% in June, the highest level since 2016, excluding the pandemic."

"Weaknesses are therefore evident in the labour market, but there has been no slump so far. This continues to argue in favour of a cautious approach by the central bank, which is also what our economists expect, with one interest rate cut in each of the next three quarters."