Source: Citic Securities Research Author: Jiang Ya, Yang Qingpu, Xu Yingbo, Liao Yuan, Dan Zhuling Dubbed 618 grand promotion in 2024 has come to an end, and Citic Securities expects that the e-commerce large cap GMV during this period is expected to achieve low double-digit growth (+12% or so), continuing the positive trend since the beginning of the year and May. Structurally, it is judged that the growth center of content e-commerce platforms has moved downward, and the growth rate of shelf e-commerce platforms has rebounded under active investment. Platform-wise, Citic Securities judges that the core platform GMV growth rate during 618 is ranked as follows: TikTok > PDD Holdings > Tmall > JD.com.
Authors: Cui Rong, Li Chong.

In June 2024, the United States added slightly more than expected non-farm employment, with education and healthcare services and the government sector being the main contributing industries.

In June 2024, the United States added slightly more than expected non-farm employment, with education and healthcare services and the government sector being the main contributing industries.

In June 2024, the number of new non-farm jobs in the United States was 0.206 million, slightly higher than the expected 0.19 million, but lower than the revised previous value of 0.218 million. The year-on-year wage growth rate was 3.9%, lower than the previous value of 4.1%; the month-on-month growth rate was 0.3%, lower than the previous value of 0.4%. The wage growth rate met market expectations. The unemployment rate was 4.1%, higher than the expected and previous value of 4.0%.

By industry:

In June, the commodity production sector added 0.019 million new jobs, of which the construction industry added 0.027 million new jobs, making it the main contributor to new employment in this commodity production category. Mining and logging did not add new jobs, and manufacturing as a whole reduced 0.008 million jobs, of which non-durable goods added 0.002 million jobs, and durable goods reduced 0.01 million jobs. The automobile and parts industry in durable goods added 0.0059 million people.

The service production sectors added 0.117 million new jobs, of which education and healthcare services added 0.082 million people (its sub-items, medical care and social assistance services added 0.0824 million people), the main contributor to the new employment in this service production category, and wholesale trade added 0.0142 million people, a significant increase from the revised previous value of 0.0015 million people.

The government sector added 0.07 million new jobs, a significant increase from the revised previous value of 0.025 million.

In June, the overall employment diffusion index of the private sector was 59.6, down from 63.4 to 56.4; the employment diffusion index of the manufacturing industry in June was 45.8, down from 59 to 48.6.

In addition, the labor force participation rate rose to 62.6% in June, which is consistent with expectations and higher than the previous value.

The combination of significantly reduced non-farm employment in April and May, a higher-than-expected unemployment rate, a slowing wage growth, and an increase in labor force participation rate in June indicate that the cooling process of the US labor market has accelerated.

First, the total number of new non-farm jobs in the United States in April and May was reduced by 0.111 million, of which the number of new jobs was reduced from 0.165 million to 0.108 million in April, and from 0.272 million to 0.218 million in May. In addition, the data for 4 out of the past 5 months have been revised down. As we mentioned in our non-farm data review in May, single-month fluctuations and contradictions between data are normal, and the final value of new non-farm employment data needs to be revised for two months. The final value of new non-farm employment shows that the US labor market will continue to cool down in the first half of this year.

Second, the year-on-year average hourly wage growth rate fell to 3.9% in June, with two decimal places of 3.86%, the lowest growth rate since the second half of 2021. After the excess savings are depleted, the impact of wage growth on US consumption is amplified, and the decline in wage growth is consistent with the weakening of US consumption this year.

Third, the temporary support industry of professional and business services decreased by 0.0489 million people in June, the largest drop since April 2021, which may indicate increased uncertainty about future demand for enterprises, and first cut temporary employees to cope with economic pressure.

Fourth, the unemployment rate rose higher than expected to 4.1%, and the biggest changes were that the unemployment rate for women over 20 years old increased from 3.4% to 3.7%, and the unemployment rate for Asians increased from 3.1% to 4.1%. In four weeks of June, the number of initial jobless claims exceeded expectations in three weeks, matching the rise in the unemployment rate that month.

Fifth, the overall labor force participation rate rose to 62.6%, and the labor force participation rate of the 25-54 age group rose to 83.7%, which is already higher than the 83% before the pandemic, indicating that the golden age workforce is already fully supplied.

According to various indicators, the tightness in the current US labor market is similar to that of 2018-2019, and it is still relatively tight in the historical cycle. In a high-interest-rate environment, it is expected that the US labor market will continue to cool down.

Based on various indicators measuring the tightness of the labor market, including the number of unemployed persons corresponding to each vacant position, U3 unemployment rate, the proportion of working-age population participating in the workforce, and the voluntary turnover rate, the current labor market in the United States is similar to that of the pre-epidemic 2018-2019 labor market. The data for new non-farm employment has weakened slightly since the beginning of this year, but it is still relatively strong compared to years when the labor market was tight in the past, and the labor force participation rate is still relatively low compared to comparable years.

Structurally, the labor market after the epidemic has shown the characteristics of the service industry being stronger than the manufacturing industry, especially the prominent role played by the medical care industry. In addition, the contribution of the government sector to the overall increase in non-farm employment has increased significantly after the epidemic.

Under the high interest rate environment maintained by the Federal Reserve, it is expected that the US labor market will continue to cool.

We expect the Fed to continue to focus on controlling inflation risks, not to cut interest rates this year, and to "exchange time for space" to continue to suppress US demand and inflation. The Fed has a dual mandate, and the Phillips curve has two ends.

May CPI showed a further cooling of inflation in the United States, and the unemployment rate in June rose to 4.1%. The risks of economic and inflation are somewhat balanced. However, the current unemployment rate is still at a historical low, and whether inflation will return to the sustainable level of 2% under the conditions of a rebound in the US import price index and a sticky housing inflation remains to be seen. The Fed still has time to focus on controlling inflation risks.

In terms of the market, according to CME data, the market currently expects a 72% probability of a rate cut in September. The expectation of a rate cut has caused volatility in the market, with the US dollar index and 10-year US Treasury bond yields declining to around 4.28% after the release of non-farm data, and all three major stock indices rising.

In the case of a cooling but not weak labor market and a resilient US economy, we expect the Fed to not cut interest rates this year, to "exchange time for space", and to wait for more good inflation data.

Risk factors

The US employment market has shown more resilience than expected; subsequent CPI data in the US exceeded expectations; the US economy entered a recession ahead of schedule.

Editor/Jeffy