Original title: Did the July Non-Farm Employment Report Strongly Change Powell's View of the Labor Market?
Source: FX168
After the July non-farm employment report “went viral”, it not only triggered a sharp reaction from the market, but also heightened investors' expectations that the Federal Reserve would cut debt purchases. But will this job market change Federal Reserve Chairman Powell Powell's view on the labor market?
At a press conference last month, Federal Reserve Chairman Jerome Powell (Jerome Powell) outlined why strong data from Friday's employment report alone was not enough to change the Fed's view of the job market's recovery.
Powell said on July 28, “Labor demand is very strong. The number of people employed increased by 850,000 in June, and the leisure and hospitality industry continues to grow significantly.” “Despite this, the labor market still has a long way to go.”
Powell added, “The unemployment rate in June was 5.9%. This figure underestimates the employment gap. In particular, the labor market participation rate has not risen from the low level that prevailed throughout most of last year. Pandemic-related factors, such as the need for care, ongoing fears about the virus, and unemployment insurance payments, appear to be dragging down employment growth.”
Following the release of the June employment report, Yahoo Finance said it emphasized three key findings, one of which was the continuing gap in overall employment levels compared to February 2020. Given that the gap between current jobs and pre-pandemic jobs is close to 7 million, even adding 1 million or more jobs in July would leave the labor market in a “long way to go.”
Powell was later asked what “further substantial progress” was made by the Federal Reserve in achieving maximum employment and price stability goals. Powell said, “What I want to say is that we still have some things to consider in terms of the labor market.”
He added, “I think we're still a long way from making substantial further progress... achieving our biggest employment goals. I'd like to see some strong employment data, that's what I think.” Powell's decision to use “employment data” rather than “number of jobs” is an important difference.
About three weeks later, Powell will deliver a speech at the Jackson Hole Economic Symposium (Jackson Hole Economic Symposium). Previously, the Federal Reserve presidents had used this meeting to suggest some future policy adjustments. Some Fed observers had anticipated that Powell would explain more clearly when the Fed might start to reduce the current pace of asset purchases.
However, Powell's speech last week showed that the Federal Reserve is willing to stay steady during the summer period of inflation, and the labor market has also recovered, albeit with some intermittent periods. Powell said last week, “Generally speaking, Americans want to work. “They'll get the job they want. However, this may take some time.” Powell's Federal Reserve is willing to wait.