Summary:

• Non-farm employment change: 157k vs 191k exp; prior 248k (up from 213k)
• Average earnings M/M: +0.3% vs 0.3% exp; prior 0.1% (down from 0.2%)
• Gold bounces from prior support; Stocks and USD mixed

The US jobs report for July has come in a little softer than expected, but the edge was taken off the bad news due to some favourable revisions to the previous release. Let’s look at the numbers now in more detail. The headline non-farm employment change fell to 157k from 248k previously, with this prior reading being revised higher from 213k originally. Against the expected 191k, this print does seem low, but once the revision is taken into account it is actually pretty much inline. 

 

 An NFP print of 157k is the 2nd lowest of the year, but given the revision higher to the prior reading it isn’t as negative as it first appears. Source: Bloomberg

The headline attracts plenty of attention but the most important component of the release for some time has been wages, and here there wasn’t too much by the way of any surprises. The M/M reading matched forecasts at +0.3% with the prior reading being revised lower to +0.1% from +0.2% previously. In Y/Y terms it came in bang inline with projections at 2.7%. The reason why this is seen as carrying a higher level of importance is because with the labour market relatively tight (the unemployment rate today fell lower to 3.9%) a rise in wages is seen as potentially correlating more closely with higher inflation. Having said that, there still remains a bit of a gap between these two metrics as shown below. 

 Wages continue to run a fair bit above inflation as measured by CPI, but there were no upside shocks today. Source: XTB Macrobond

At the same time as the employment data was released there was also the latest trade figures from the US. The Trade balance came in a little higher than expected (-46.3B vs -46.5B exp), but still showed a fall from the prior of -43.1B. Trade remains on the radar of traders at the moment with news that China will levy fresh tariffs on US imports hitting the wires just a few minutes before the NFP release. 

 US trade balance fell lower in June, with this metric dropping back lower after rising recently. Source: XTB Macrobond

 In terms of market reaction to this batch of data, it remains a little unclear with the USD first dropping and then recouping some of those losses. Gold has moved up to its highest level of the day at 1214 after earlier respecting the prior support around the 1205 region. Stocks have pulled back a little with the major US indices moving higher ahead of the release on news that PBOC had raised their reserve requirement, before they reversed on the NFP miss and the latest tariff news. 

 Gold has respected the prior lows around 1205 and is now retesting the 1216 level that it broke down from, from below. Source: xStation