A Big Step Down the Road of “Substantial Further Progress”

Summary Employers added 943K jobs in July and hiring was revised higher over the previous two months. The recent pickup in momentum turns the volume up on the debate over when the labor market will meet the FOMC’s criteria of “substantial further progress.” While there were some indications that labor constraints continued to ease, the rise in the Delta variant clouds the outlook. Fed officials will likely be pleased with July’s progress, but we ultimately think they will want to see further ground recovered and if constraints boil down to short-term frictions or longer-lasting damage before kicking off tapering. Turning Up the Heat on Hiring The July jobs report is likely to turn up the volume on the debate over whether the labor market has or will very soon meet the FOMC’s criteria of “substantial further progress.” Employers added 943K new jobs in July, and hiring in May and June was revised up by a combined 119K. The pace of job growth over the past three months has reached 832K, the highest since October of last year, demonstrating a considerable pickup in momentum (see chart). READ FULL ARTICLE >>