The employment report was better than expected
The economy added 163,000 jobs in July, above consensus expectations of 100,000. While this was notably better than expected, the guts of the report were soft. The unemployment rate edged higher to 8.3% as a drop in the labor force was more than offset by a decline in household employment. In addition, the work week was unchanged and wage growth was sluggish. We continue to expect growth to slow in the second half of the year as the uncertainty shock from the fiscal cliff weighs on corporate investment. This should ultimately trigger additional Fed easing, in our view. That said, today’s report may have bought the Fed some time.
Read the full report here.