US: Verizon workers should help lift nonfarm payrolls 190,000 in June – BMO CM

Sal Guatieri, Senior Economist at BMO Capital Markets, suggests that the return of 35,000 striking Verizon workers should help lift nonfarm payrolls 190,000 in June after the weakest report (38,000) in five years.

Key Quotes

“The expected underlying increase (155,000) is close to this year’s norm (excluding the Verizon strike). That’s both good and bad news. A slow-growing labour force (0.5% on average in the past five years, or 83,000 per month) means that job gains even a bit below 100,000 would keep the unemployment rate on a downhill course. The bad news is that progress in labour markets has clearly ebbed, with monthly payroll gains slowing from last year’s 229,000 pace, and the number of involuntary part-time workers jumping the most in 3½ years in May.

A near-term pickup in hiring seems unlikely, as lower capital goods orders suggest business investment remains soft. Sluggish exports suggest factories could slash payrolls for a fourth time in five months. Supply is also an issue, as more companies can’t find qualified help. Despite the expected decent rebound in June payrolls, the unemployment rate could edge up to 4.8% after sliding 0.3 percentage points to post-recession lows. This is because the labour force should rebound after shrinking by almost half a million. Amid slower job growth and Brexit fears, another disappointing jobs report would foment rate-cut chatter, and possibly pull the 10-year Treasury rate to all-time lows.”