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SocGen: Employment Demand Not Moderating Sufficiently

US OUTLOOK/OPINION
  • SocGen see nonfarm payrolls growth of 250k. They see employment gains are moderating, but importantly employment demand is not moderating sufficiently and compensation gains remain firm.
  • Weekly unemployment claims edged down in the latest week, but for June, initially claims are posting near 250k, while continued claims are just above 1.7 million. These low jobless measures imply ongoing strength heading into June.
  • The leading industries for job gains by absolute numbers continue to be restaurants, healthcare and education – sectors with employment still below their Feb’20 levels although closing in on past highs.
  • The unemployment rate is likely dip to 3.6% after jumping 0.3pps to 3.7% in May when the household survey registered a 500k worker decline. They attribute the discrepancy between the household data and the strong payroll employment figures of 339K to the volatility of the household survey. Year-to-date, both surveys offer similar results, the household survey is just far more volatile.
  • AHE again seen at 0.3% M/M.

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