Lowest unemployment since 1969
We're all watching closely for signs of a recession, but the US employment data continued to confound with the unemployment rate dropping by 0.2 percentage point to 3.5 per cent.
That's the lowest unemployment rate in the 50 years since May 1969, and marks the 19th consecutive month below 4 per cent unemployment.
Who could've predicted this expansion back in 2009 (and still no inflation!)?
There were record low unemployment rates for Hispanic and African Americans.
Headline growth in nonfarm payrolls wasn't especially strong at +130,000, but combined upwards previous to preceding months totalling +45,000 kept the 3-month average growth at a very solid +157,000.
However, average hourly earnings were little changed in the month (down 1 cent), which took the annual earnings growth down to +2.9 per cent, for the slowest result since July 2018.
Inflation expectations continued to sag to below 1.5 per cent, to sit at the lowest level since 2016, so interest rates will probably still be cut according to market expectations.
Correlations to returns
It's amazing to see the longest expansion continuing to push down unemployment even now.
For investors in the US stock market, it is worth remembering the relationship between the unemployment rate and stock market returns - which is to say, low unemployment means low expected future returns, and this time will be no different.
The strongest forward total stock market returns are invariably seen when unemployment is high, and sentiment is low.
The strongest forward total stock market returns are invariably seen when unemployment is high, and sentiment is low.
