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The headline job gains number for June showed a gain of 195K jobs and no change in the unemployment rate which stands at 7.6%. After a strong ADP number and a good employment component in the ISM Non-Manufacturing PMI, this headline number was not such a big surprise. Revisions were strong, but in the past revisions have been even stronger. So why is the US dollar storming the board the board?

Here are 3 reasons why this jobs report is much better than it initially seems.

  1. 3 month average job gains close to 200K: June and May saw 195K job gains, and April saw +199K after the revisions. The average is above +196K, just 4K short of +200K.  A sustained gain of 200K job gains per month is sometimes seen as the level that the Fed is looking for. This view has also been expressed by some Fed officials. This makes tapering quite close.
  2. Another rise in the participation rate: a higher participation rate means that the unemployment rate doesn’t fall as jobs are gained. But the Fed has often stressed that it doesn’t only look at the unemployment rate, but also on the participation rate. So, this figure rose for a second month in a row, to 63.5%. Earlier in the year, it fell to the 63.3%, the lowest level since 1979. The fact that more Americans are returning to the workforce shows that the recovery is becoming more sustainable.
  3. The best initial headline figure for June: Up to this report in 2013, the months of June saw initially weak reports: the best figure since 2000 was a gain of 146K jobs in the initial report. The figures were sometimes revised higher, but they tended to be low in the first release.

What do you think?

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