Fed to cut rates soon (& a warning shot for Aus)

US payrolls weakening

US nonfarm payroll employment increased by +206,000 in June, notching a 42nd consecutive monthly gain.

At face value this looked a solid number, but revisions snatched back some -111,000 of employment gains from the preceding two months, meaning that this was a much softer release than it first appeared.

The unemployment rate has increased from under 3½ per cent to 4.1 per cent, and looks set to continue rising from here, with there already being over 800,000 more unemployed persons than a year earlier. 

Source: BLS

Average hourly earnings increased only modestly by +0.3 per cent in June, to be +3.9 per cent higher over the year.

If not this month, the Federal Reserve is quite likely to be cutting the funds rate ahead of the November election.

Like Australia, Canada has been adding population growth at a stupendous rate, but can no longer find enough employment to compensate, and the unemployment rate has steepled worryingly to 6.4 per cent as the jobs market stalls. 

Source: Indeed

Leading indicators such as ANZ's job advertisements suggest that Australia could similarly see its unemployment rate rising over the remainder of 2024. 

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