Why does the jobs report matter to investors?

Thought of the Week / July 2, 2021

In the world of investing, you hear a lot about the “jobs report,” but why is it important? The jobs report, or employment report, refers to the report released monthly by the U.S. Bureau of Labor Statistics, which details the number of jobs created in the United States each month. 

The jobs report covers 89% of the jobs that drive the entire economy (it does not account for farming jobs). It provides recent data on employment in most sectors of the economy, and can be used to predict trends. Additionally, the number of jobs being created can signify whether an economy is improving, overheating, or waning.

After the 2008 recession, the jobs report usually showed an additional 180K to 200K jobs each month. That was until the pandemic hit. The massive layoffs in March and April of 2020 completely overturned the usual progress of the job market. The extreme turbulence of the 2020 job reports correlated with the market volatility that we experienced.

The most recent jobs report was released today, Friday, July 2nd. This report showed that employers added 850K workers in June,  which is the strongest gain in 10 months. Jobs are still around 6.8M short of pre-covid levels, but they have increased by almost 3M so far this year. The markets responded positively, with The Dow Jones up (0.45%) and Nasdaq up (0.59%).

Our team dives into these reports each month, paying close attention to how comparable they are to predictions and looking into industry-specific numbers. If you are interested in surfing these reports yourself, they can be found at bls.gov.

Chad Slagle

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