Markets Down As Job Growth Soars

The United States jobs market has a surprising June, adding 224,000 jobs to counter concerns of a sharp slowdown.  But while job growth is certainly a sign of good things to come, it did not have the same effect on the Dow Jones Industrial Index—or the broader market as a whole, which suffered notable losses. 

With the market’s solid data, the Federal Reserve is entering the Independence Day weekend far less of a half-point rate cut by the end of the month. Of course, slowing wage growth coupled with continued trade concerns with China might encourage, at the very least, a quarter-point rate cut. 

Now Wall Street did expect job growth; however, analysts had only forecast about 165,000 new jobs. After small downward revisions to last month’s totals, it looks like the economy has been adding, on average, 171,000 new jobs every month in Q2.  This is definitely solid growth but it still nothing close to the 223,000 average monthly job growth, from last year. 

Oddly enough, the unemployment rate in the US also saw a slight uptick—by 3.7 percent—but analysts say this actually confirms job growth, and an even bigger jump in first-time employment. Obviously, all of this a good sign of economic health.

Unfortunately, though, the report showed that hourly wage growth has slowed.  Last month, the report says, wages only experienced a 0.2 percent monthly gain, with 3.1 percent rise from one year ago. Both of these failed to meet analyst expectations of 0.3 percent and 3.2 percent, respectively. 

In addition, aggregate weekly pay saw growth of an annualized 3.7 percent for the first half of this year.  This is down from 5.4 percent from the same period last year. This, of course, reflects slower job gains as well as a shorter work week and better-than-expected average hourly wage growth.

But all of the good news in the jobs sector didn’t help Wall Street.  Job gains helped to drag both the Standard & Poors 500 and the Nasdaq about 0.9 percent.  All three major US indexes closed with record highs in a short session on Wednesday—heading into the holiday weekend—so the drop is quite the surprise, indeed.