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To: Bryan who wrote (22590)	8/6/1999 8:46:00 AM
From: May Tran	Respond to of 40688

Nice Going Bryan. US July Employment Report: Economic Instant Insight Bloomberg News Friday, August 6 1999 08:29 AM EDT Washington, Aug. 6 (Bloomberg) --The following is a summary of the July employment report, released by the Labor Department: Expected Market Reaction Substantial. July's larger-than-expected gain of 310,000 jobs, along with a larger-than-expected rise in average hourly earnings, could push up U.S. Treasury bond yields because it suggests labor conditions are getting tighter, which could lead to higher inflation and another interest rate increase by the Federal Reserve later this month. July's unemployment rate was unchanged at 4.3 percent. Workers' average hourly earnings rose 0.5 percent in July -- the largest gain since January -- after increasing 0.4 percent in June. Analysts expected a gain of 206,000 jobs last month, and earnings to rise 0.3 percent. Behind the Numbers Manufacturing employment increased by 31,000 last month, the first gain since last August, when autoworkers from General Motors Corp. returned after a two-month strike. Manufacturing employment remains 459,000 lower than its most-recent high in March 1998. Service-producing employment rose 260,000 in July after rising 292,000 in June. Construction employment increased 22,000 in July, after a 21,000-job gain in June. The Labor Department also said: Average weekly hours worked were unchanged at 34.5 in July. Manufacturing overtime increased to 4.8 hours in July from 4.7 hours during June. The index of hours worked, a gauge of economic growth that combines changes in the work week and changes in payroll growth, rose to 148.2 in July from 147.7 during June. Average weekly earnings increased to $458.51 during July from $456.44 during June. The percentage of unemployed workers who voluntarily quit their jobs in July fell to 12.8 percent from 14.5 percent during June. The percentage of first-time workers entering the work force rose to 6.8 percent in July from 5.9 percent in June. The percentage of the U.S. population holding jobs fell to 64.1 percent in July from 64.3 percent during June. During June, payrolls rose 273,000, a revision from the previously reported gain of 268,000 jobs. What Experts Say ''We're not seeing a lot of evidence of slowing in the pace of job creation,'' said Paul Ferley, an economist with Harris Bank and the Bank of Montreal in Toronto, before the report. ''Labor shortages are a major constraint in various regions of the country and in certain industries,'' said Lynn Reaser, chief economist at Bank of America Private Bank in Jacksonville, Florida, before the report. ''That's likely to continue into the next year.'' Average hourly earnings have started to accelerate after slowing last year and ''the risk is it could be more pronounced as we move forward,'' especially as manufacturing payrolls start to rise, Ferley said. ''Productivity might be hard-pressed to offset all of that acceleration,'' Reaser said. Yesterday, the Labor Department reported non-farm productivity rose at a smaller-than-expected rate in the second quarter, and labor costs grew at their quickest pace in 1 1/2 years. Productivity grew at a 1.3 percent annual rate, while labor costs increased at a 3.8 percent pace. Previous Market Reaction After the June jobs statistics were released July 2, the yield on the U.S. Treasury's benchmark 30-year bond fell a basis point to 6 percent. The implied yield on the federal funds futures contract for September delivery, an indicator of expectations for future Federal Reserve interest-rate actions, fell a basis point to 5.13 percent. Market Performance The benchmark 30-year Treasury bond has recently fallen, pushing up yields, amid concern Federal Reserve policy-makers will raise interest rates as soon as their next meeting Aug. 24. Earlier today, the yield on the bond fell 2 basis points to 6.02 percent after falling 6 basis points yesterday. The implied yield on the federal funds futures contract for September has ranged between 5.08 percent and 5.21 percent since the end of June. Yesterday, the implied yield on the September futures fell 2 basis points to 5.16 percent. BBG/US-July-Employment-Report:-Economic-