Casey Wagner

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



It may have been a short trading week, but on the economic data front, things have been very busy.&nbsp;



The US labor market was in full focus, first with the <a href="https://blockworks.co/news/june-adp-report-miss-jobs">ADP’s print</a> on Wednesday and then the Department of Labor’s report on Thursday.&nbsp;



Here’s a recap:



<h2 class="wp-block-heading">June ADP report shows private-sector payroll decrease</h2>



The June ADP employment report came in remarkably lower than projections. Analysts expected the private sector to add 100,000 positions, but in reality, payrolls decreased by 33,000, according to ADP.



It’s the first negative print since March 2023, although the figure has declined every month since March 2025. Take this with a grain of salt, though. A government employment report painted a different picture (more on that later).



<h2 class="wp-block-heading">Jobless claims lower than expected</h2>



Initial jobless claims for the week ended June 28 came in lower, at 233,000. This compares 240,000 expected and 237,000 the week prior. It’s the softest reading in six weeks, but the figure still remains elevated compared to this time last year.



Summer is typically volatile for unemployment figures, so keep that in mind for the coming weeks. 



<h2 class="wp-block-heading">BLS employment report shows payroll growth</h2>



The Department of Labor’s Bureau of Labor Statistics June employment report showed public and private payrolls grew by 147,000, outpacing expectations (~110,000). This comes in line with the 12‑month average (~146,000), while the unemployment rate dipped to 4.1% as participation fell slightly.



Sectors that saw the most growth were state/local government (+73,000) and healthcare (+39,000). Private‑sector hiring slowed, coming in at 74,000 — its weakest since October. 



This is, of course, much higher than the figure reported by ADP, but it’s not terribly uncommon for these two reports to come in mixed (they have different data reporting cutoffs, methodologies, etc).



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Economy

For the US labor market, June data was mixed

Felix Jauvin

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



This week is all about the labor market! With the jobs report coming out tomorrow, let’s dive in and get a state of play on where things stand.&nbsp;



My favorite way to get a high-level pulse on the labor market is taking a look at Atlanta Fed’s labor market spider chart:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdl_1-GmyBgNjNKdMUI41Ss4x5RPqT4t08Uex5Jx3wCK_fbt03yG7IT1k2y38ZZUsrF7-hrb-toq0F36TE9K2wIRxCa3etSggRf5_ciRgz2Jnwu_y4DBx8tKX76rrr2Z6rLrTld?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



Compared to both one year ago and to the pre-Covid trend, we can glean a few general trends:



<ul class="wp-block-list">
<li>The private sector is quite weak and continues to be. Hiring rates are very low, causing people to hold onto their jobs and avoid quitting at all costs.</li>



<li>Wage growth, one of the key drivers of the huge inflation we saw in 2021-2022, continues to soften as the labor market returns to being in balance.</li>



<li>Generally, it’s a bad time to look for a new job, but as long as you don’t quit, it’s unlikely you’ll be laid off either.</li>
</ul>



With the stage set, let’s dig into all the labor market data we’ve received this week.



<h2 class="wp-block-heading">JOLTS</h2>



On Monday, we received the JOLTS report for April, which came in quite strong.



Job openings rebounded higher to 7.39 million, above consensus expectations of 7.10 million.



However, when contrasting it to higher-frequency data like Indeed Job Postings, this is likely to be an outlier bounce higher that is likely to return to a downward trend next month.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfBLuU8ER87COjuMY2STgxWLLa1pR8h2QV1-j9yOTXixfzXPbYXtBuPWj3ewJYrMxKS4YcbX1OOa72QaiXVKnY7rhq4ydawC7g3TkVMBN0gV4hXB3yYvfWvanqwu36Hz9G1vNy0Xg?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



One of the key insights for understanding slack in the labor market is comparing the number of job openings to unemployment.&nbsp;



One of the big reasons the Fed was able to hike so aggressively in 2022 without hurting the labor market is because the huge amount of job openings acted as a buffer so that the unemployment rate wouldn’t tick up. The Beveridge curve is the best way to view this dynamic.&nbsp;



As we can see from this week’s print, we held steady at the low end of the job vacancy rate where there’s just enough slack in the labor market to avoid an acceleration in unemployment:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcSdKL_HEL6fJSwlBhzctWOajhBfV5c8z0tH1hNNrlB2u_J1QwsASelwvXytOvwaQpZsvHd7GPfjfayskXSWCxMeFz8GNYrbZWv5FGdx09TVvAfULwWE1Asj4_xnz4F2WP0fjc1vQ?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



<h2 class="wp-block-heading">Claims data</h2>



Today we received the claims data, which provides one of the more high-frequency labor market data points we can see every week.&nbsp;



Interestingly, continuing claims — which saw a new cycle high last week — were revised lower and are now back within the range:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXenzw1VeKvGYZ88zL4N-8gQ5nHapVUXpPJNr7oDCMrFJpSyd8j-6D8Pd-NiHF3kGHQZs9CsGI-rR4U88xjPrSwPh53c6gIb3W-TB0n2PdEHzU8tOO6eXsb3ulxCt4jpw8DknsMvvg?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



Finally, we receive the jobs report tomorrow, which will provide a good look into how the labor market is digesting the impact of tariffs:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe-zrs5X2pKIR76pN7AxCxGGTH7N0tEMvkTsnSaHd5j7GsfujQwfvUHpUQyn4EOXdlKQ5k8QPs56AYw58ykx3eelJpDFdgWwdkJLJfnDjt68oW_EVU4ieB5Pqa8uVPiB6rJnMF9?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



Overall, according to this week’s data, a picture of a labor market that remains on thin ice emerges.&nbsp;



Not quite bad enough to crack the ice — but still strong enough to hold up the economy.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

The current labor market, in charts

Ben Strack

<div id="highlights-block_610d75edc1f87" class="highlights">
 <ul>
 <li>Unemployment rate down “considerably” from highs seen during Covid-19 outbreak last year, but remains higher than pre-pandemic levels</li>
 <li>Report reinforces the Fed will taper its quantitative easing in the next couple months, markets watcher says</li>
 </ul>
 
</div>



Nonfarm payroll employment rose by 943,000 in July as unemployment fell from 5.9% to 5.4%, the US Bureau of Labor Statistics reported Friday morning.



Notable job gains occurred in leisure and hospitality, in local government, education, and in professional and business services. The total number of unemployed people fell by 782,000 to 8.7 million.



“These measures are down considerably from their highs at the end of the February-April 2020 recession,” the report states. “However, they remain well above their levels prior to the coronavirus pandemic.”



Before Covid-19, in February 2020, the number of unemployed people was at 5.7 million, representing 3.5%, according to the report.



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="878" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg" alt="Jobs report chart" class="wp-image-6256" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=305 305w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=256 256w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/civilian-unemployment-ra-1-1024x878.jpeg?w=1400 1400w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></figure></div>



President Joe Biden said in a press conference Friday that his administration was the first in history to add jobs in each of the first six months in office, and the only one to add 4 million jobs in that span.&nbsp;



“Economic growth is the fastest in 40 years,” he said. “Jobs are up, and unemployment is the lowest since the pandemic hit.”&nbsp;&nbsp;&nbsp;



Tom Essaye, founder and president of Sevens Report Research, said the July jobs report reinforces that the Fed will taper its quantitative easing in the next couple of months. The <a href="https://cms.blockworks.co/us-adds-850000-jobs-as-unemployment-upticks-june-jobs-report/" target="_blank" rel="noreferrer noopener">June jobs report</a> originally showed 850,000 jobs added, he noted, a figure that was later revised to nearly 1 million.&nbsp;



“You have two back-to-back months with a million job adds, which really kind of cements the fact that the Fed needs to start reducing QE,” Essaye told Blockworks. “That’s not a problem for markets at this point, because markets have been expecting it. A potential problem arises if we get a few more really good jobs reports because then that would essentially increase the risk the Fed tapers sooner than expected or tapers larger than expected.”



The market currently expects the Fed to acknowledge its potential tapering plan during the <a href="https://www.kansascityfed.org/research/jackson-hole-economic-symposium/" target="_blank" rel="noreferrer noopener">Federal Reserve Bank of Kansas City</a>’s economic policy symposium in Jackson Hole, Wyo., from Aug. 26 to Aug. 28, or at its September meeting, he added. It is expected that the quantitative easing reductions would begin in December at a rate of about $15 billion of tapering per month and end in mid-2022.



“If that gets pulled forward and we see tapering begin in November, or almost more importantly if tapering occurs more quickly … QE is going to end essentially in March or April,” Essaye said. “That could actually be quite a shock to markets and we would almost see a repeat of the 2013 taper tantrum, probably something worse.”



<h3 class="wp-block-heading">Delta threat still real</h3>



The jobs report comes after Federal Reserve Chairman Jerome Powell <a href="https://cms.blockworks.co/fed-chair-powell-economy-depends-on-covid-path/" target="_blank" rel="noreferrer noopener">said during a meeting last week</a> he expected the Covid impacts weighing on employment growth, such as ongoing fears of the virus and unemployment insurance payments, would wane in the coming months.



Powell added at the time, however, that the Fed would continue to monitor the effect of the slowing pace of Covid vaccinations and the spread of the Delta variant.&nbsp;



Daily new Covid-19 cases reached a six-month high of more than 100,000 in the US, <a href="https://www.reuters.com/world/us/us-covid-19-cases-hit-six-month-high-over-100000-reuters-tally-2021-08-05/" target="_blank" rel="noreferrer noopener">Reuters reported on Thursday</a>.&nbsp;



A total of 165 million Americans are now fully vaccinated, Biden said. As a result, the average job growth over the last three month has been 832,000, he said.&nbsp;



“Even so, my message today is not one of celebration,” the president noted Friday. “It’s one to remind us we’ve got a lot of hard work left to be done both to beat the Delta variant and to continue our advance of economic recovery.&#8221;



In July, 13.2% of employed people teleworked because of the coronavirus pandemic, down from 14.4% in the prior month, the Friday report indicated. A total of 5.2 million people reported that they had been unable to work because their employer closed or lost business due to the pandemic, down from 6.2 million in June.



<h3 class="wp-block-heading">Market impact?</h3>



In terms of the latest report’s impact on the stock market, Essaye said the job gains were good for financials, industrials and materials stocks. The technology sector, viewed by many as a defensive sector of sorts, often lags when it appears the economy could grow quickly.



The Dow Jones Industrial Average and the S&amp;P 500 had risen 0.6% and 0.8%, respectively, following the release of the jobs report Friday morning, as of Noon eastern time. Meanwhile the Nasdaq Composite Index, which has a heavy weighting in tech, had fallen by 0.5%.

Labor

Newsletter

Blockworks Research