US June non-farm payrolls rise by 850,000

According to the US Department of Labor, non-farm payrolls increased by 850,000 in June.

That was better than the 700,000 gain expected by economists.

The prior two months' prints for non-farm payrolls meanwhile were revised up by a combined 15,000.

As one would expect, America's services sector accounted for the bulk of new job posts with an increase of 642,000 following a rise of 497,000 in May.

But hiring by government was unusually robust alongside with the public sector taking on 188,000 more people, up from 67,000 in the month before.

US equity futures strengthened on the back of the latest labour data, with those on the S&P 500 11.50 points higher as at 1350 BST.

Gold futures however were being whipsawed around and were last up 0.46% to $1,785.0/oz.

"Equity futures have taken off and gold price are being hammered on the back of the US NFP data. Looking at the numbers, it is very much clear that labor market is going from strength to strength which is very positive for overall investment sentiment," said Naeem Aslam, chief market analyst at AvaTrade.

"Although the price of gold moved lower on the back of the data, it is important to keep in mind that a large number of investors have already started to price a hawkish stance and this means that we may not see any significant downside move in the gold prices over the next week."

Furthermore, while non-farm payrolls grew more quickly than expected, the unemployment rate, which is derived from a separate survey, ticked higher from 5.8% for May to 5.9% in June (consensus: 5.6%).

In parallel, average hourly earnings were up by 0.3% month-on-month (consensus: 0.4%) and the length of the average work week ticked lower by a tenth of a percentage point to 34.7 hours.

On that note, analysts at Capital Economics poured cold water on hopes for a trend shift in non-farm payrolls.

"But with the labour force rising by just 151,000 and still more than three million below its pre-pandemic peak, we aren’t entirely convinced that this is the start of a much stronger trend," said Capital Economics's senior US economist, Andrew Hunter.

"Overall, it's important not to put too much weight on a single employment report and we are still sceptical that this marks the start of a stronger trend. If it does, however, that could see recent calls from several officials for an earlier end to the Fed’s asset purchases, and potentially for a first rate hike as soon as next year, get louder."

On a more bullish note, Lydia Boussour and Gregory Daco at Oxford Economics told clients: "While today’s report was shy of the coveted 1-million mark, it paints a picture of a steadily recovering jobs market.

"With further progress toward the Fed’s dual mandate likely over the summer, we anticipate a Fed tapering announcement at the Jackson Hole Symposium in August. Still, while tapering would start in early 2022, rate liftoff wouldn’t be on the table until early 2023."

-- More to follow --