On Friday, U.S. stock market surged employee situation report which increased payrolls by 287,000 on June. The Labor Department said this is a strong rebound from May’s surprised weakness and the strongest month of hiring since October 2015. The number was boosted by the end of a strike at Verizon Communications Inc. (NYSE: VZ) which the agency had said shaved approximately 35,000 jobs from payrolls in May.
“The Friday’s report will come as a sigh of relief.” National Association of Federal Credit Unions chief economist Curt Long said, “while numerous land mines remain on the economic front, policy makers can at least be reassured that the labor market remains a bright spot.”
The surprising employment report in May combined with Brexit vote succeed had fanned wider worries that the American economy was in danger of slowdown. And those concerns persuaded the Federal Reserve last month to oppose any short term interest rate hike.
“Is the markedly reduced pace of hiring in April and May a harbinger of a persistent slowdown in the broader economy?” Federal Reserve Chairwoman Janet Yellen asked in a June speech. “Or will monthly payroll gains move up toward the solid pace they maintained earlier this year and in 2015?”
Ms. Yellen also cautioned that “one should never attach too much significance to any single monthly report.” But the solid June report should reassure Fed officials that the economic expansion appears set to continue in its eighth year.
Policy makers are scheduled to meet in the end of this month, but officials might prefer wait for more data about the situation of the economy and the effects of Brexit before raising interest rates a second time. Additional policy meetings are planned in September, early November and mid-December.
The June payrolls surge “suggests that the sharp slowdown in the preceding months was nothing more than a blip,” said Andrew Hunter, assistant economist at Capital Economics, in a note to clients. “Fed officials will want to see evidence of a more sustained recovery in employment growth over July and August as well, but this nonetheless supports our view that the next hike could still be in September.”