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Josh Nye, senior economist at the Royal Bank of Canada, notes that the US employment growth rebounded to 224k in June and the unemployment rate ticked higher to 3.7%, while the wage growth was steady at 3.1% year-over-year.

Key Quotes

“A nice rebound in US payroll growth will do little to change market calls for the Fed to cut rates later this month, though a 50 basis point move looks less likely. It’s not that the jobs backdrop is weak. Despite some soft payroll reports in recent months, employment growth is tracking 172k year-to-date. That’s down from 223k in 2018 but still well above the ~100k pace of labour force growth.”

“So while unemployment ticked up to 3.7% in June, it is still down from last year. Wage growth has been a bit less impressive though, losing momentum in recent months and remaining just above the 3% mark””not enough to generate significant inflationary pressure.”