Economist reactions:
"A worrisome side of today's employment report is the decline in the participation rate to its lowest level since October 1977. This will fuel the secular stagnation debate. While this solid but far from great jobs report will raise questions about a September interest rate hike, the Federal Reserve is still likely to hike then absent a big external shock." Mohamed El-Erian, Allianz
"This isn't a terrible report by any means but it's certainly disappointing. In terms of the Federal Reserve, one report never really changes the general narrative and this one certainly does not. We still think the Fed is on track to raise rates later this year but broadly speaking, the data is not coincident with a more rapid pace of tightening than is currently envisioned." -Dan Greenhaus, BTIG
"We still think there's a good chance that the Fed will hike rates in September." -Paul Dales, Capital Economics
"If we continue get this type of payrolls report again in July and August, the Fed won't move in September. If they don't see wage growth, they could wait until next year." Mark Zandi, Moody's.
"The net read on the economy from the monthly labor market data is that the economy is stuck on the same shallow growth trajectory that has been in place for the past several years. Even the decline in the jobless rate was a reflection of a weaker labor market." -Steven Ricchiuto, Mizuho Securities USA
"What counts is the trend in unemployment, which continues to fall rapidly. The headline rate is now inside the Fed's forecast range for [the fourth quarter], 5.2% to 5.3%, and just two-tenths above the top of their range for fourth quarter next year, so policy makers are now set up nicely to tighten soon on the basis that the labor market is normalizing faster than they expected." -Ian Shepherdson, Pantheon Macroeconomics
"It's hard, based on that common sense assessment, to conclude that the Fed's economic criteria for liftoff have actually been met-and the markets seem to agree." -Guy LeBas, Janney Montgomery Scott
The trend in employment growth remains more than strong enough to keep the unemployment rate...trending down, which should eventually lead to more clear-cut acceleration in wages, but the hourly earnings series is back to showing no pick-up....We believe this report keeps the Fed on track for tightening at the September meeting, but there will be two more employment reports between now and then." - Jim O'Sullivan, High Frequency Economics
"If you look at the top headline, a little disappointing, but when you start looking at the trend over the last year, this is a positive outcome. And again we are above 200,000 new jobs, so that took the big dollar negative risk of the week off the table. Therefore we can focus on Greece and the issues on the other side of the pond.... We haven't seen the great dollar strength over the last week even with Greece's problems, but really, if you back it up, this time last year it was at $1.3660, so is the euro really that resilient? I don't think so....There is still a lot of uncertainty with Greece and if they strike a deal, maybe it strengthens to $1.15, but after we get past it, we get back to fundamentals and the diverging monetary policies. Even if we get a Greek deal, we don't get back to $1.30 because of this longer-term interest rate differential issue." - John Doyle - Tempus
Hilsenrath wrote about the Fed is struggling with two narratives:
- First quarter growth stumbled because of one-times shocks but the economy is continuing to improve and will trend higher
- Problems in Europe, emerging markets and China will hurt global growth and the strong US dollar will keep a lid on inflation
"While the jobs data reassure Fed officials the US economy has rebounded from a weak 1Q, it doesn't help them answer another question: How might financial turbulence overseas affect the economy in the months ahead?" he wrote after the report.
