🇺🇸❗️Cable FX Macro Weekly Note: U.S. June Nfp

**As seen in Risk In The Week report 07/02/23, subscribe at cablefxm.co.uk/reports

May jobs numbers posted the largest addition since January at 339K, this came to top analysts’ estimate of 195K. The multi sigma surprise comes to record the 14th consecutive month of upside beats. The prior month was revised higher by about 40K jobs, May’s manufacturing sector shredded 2K jobs, the household survey saw a decline of 310K jobs. The unemployment rate ticked higher to 3.7% from the prior 3.4%, this is the highest rate since August, and it was mainly due to prime-age workers entering the labour force. Average hourly earnings eased to 0.3% M/m from the prior 0.4%, this turned into an annual rate of 4.3%. The largest jobs additions were seen in business services, government and health care. So far, the labour report supports the case for further rate hikes from the Fed, even as inflation eases.

We have previously seen the Fed pointing at the tightness in the labour market, Fed Chair Powell has indicated the strength is feeding into 'super core' inflation. Estimates point to a further gain of 225K, while the jobless rate is seen dropping to 3.6%. If the consensus is met, this would leave the 3-month average at 286K vs a prior 290K, showing little progress from policy tightening.

The desk at Rabobank noted that Fed staff is starting to lose conviction on its baseline scenario forecast, they see unemployment rate peaking next year and staying there until 2025. Rabo noted that the FOMC June meeting minutes showed a rise in the possibility of a continuous economic growth, avoiding a downturn. Wells Fargo analysts will be focusing on potential revisions from May, they see the headline moderating in June as they note jobless claims moving up between the survey weeks while job postings continue to fall.

The June change in nonfarm payrolls forecast ranges from 110K to 350K, the top ranking forecasters stand above consensus at 250K.