On the June Jobs Report

A big upside surprise on top of upward revisions – but payroll data continues to be screwy, out-of-synch with a broad front of other contemporaneous labor market indicators. Those have been strong when payrolls seemed weak, and this month those are weak when payrolls seem strong. The unemployment rate ticked up because of growth in the labor force, suggesting considerable slack still in the labor market as the prime-age labor force gets younger. This is underscored by Fed-friendly sluggish wage gains. It was a poor month for labor market internals, with the job-finding probability falling while the separation probability rose; long-term unemployment rose for the second month in a row, and involuntary part-time work expanded. Overall we see none of this as posing a cyclical threat to the US economy.