Looking beyond payrolls for clues about the labour market: Insights from Denise Chisholm - July 9, 2026

Look beyond payrolls

Headline employment reports often draw the most attention, but Denise cautioned against relying too heavily on a single data release. Discussing the weaker-than-expected U.S. nonfarm payroll report for June, she noted that payroll data can be heavily influenced by revisions and seasonal adjustments, making it difficult to assess underlying labour-market conditions with confidence. Instead, she advocates a "mosaic" approach that incorporates multiple sources of information, including ADP employment data, survey-based indicators and employment measures from the Institute for Supply Management (ISM). These indicators can help provide a broader perspective on labour-market trends.

A positive shift in hiring trends

The employment components of the ISM manufacturing and services surveys track whether businesses are broadly hiring or reducing staff and have historically provided insight into future employment trends. Recently, both indicators moved into expansion territory after an extended period of contraction. While it remains too early to determine whether the improvement will persist, Denise said the shift may provide a more constructive signal for future employment growth.

Broader growth matters

According to Denise, much of the recent job growth has been concentrated in government, healthcare and education, with relatively limited growth across many other parts of the economy. The recent improvement in hiring indicators may point to a broader distribution of employment growth across sectors and companies. A more widespread hiring environment could indicate that labour-market conditions are becoming less concentrated in a handful of areas.

What the Fed is watching

The labour market remains an important consideration for the U.S. Federal Reserve as it balances its dual mandate of employment and price stability. Denise argued there may be more slack in the labour market than headline unemployment figures suggest, pointing to continued deceleration in wage growth across the economy. She also suggested the risk of a significant resurgence in inflation appears less evident in the data than many investors may assume. In her view, negative real income growth may limit the potential for inflation to accelerate meaningfully. Regarding monetary policy, Denise noted that policymakers continue to debate the appropriate path forward. She suggested that maintaining a somewhat hawkish tone may help support the Federal Reserve's credibility while policymakers assess incoming data.

Oil may be less of a risk than feared

While geopolitical developments can create uncertainty, Denise noted that markets often adapt more quickly than investors expect and that markets may have already absorbed many of the concerns surrounding higher oil prices. She pointed to rising production within OPEC and pipeline developments in the United Arab Emirates as factors that could help ease supply bottlenecks over time. More broadly, she suggested global trade relationships and economic alliances continue to evolve, although the ultimate outcome remains uncertain.

Revisiting the momentum trade

Questions have emerged about whether recent market leadership resembles previous periods of excessive enthusiasm, including the late stages of the dot-com era. Denise examined those concerns through the lens of momentum investing. While momentum-related strategies have been strong in recent months, she noted that the factor has faced challenges over much of the past five to seven years, depending on how it is measured. As a result, recent strength may look more like a catch-up period than evidence of widespread market euphoria. Although momentum-driven markets can experience greater volatility, Denise said she does not currently see the kinds of anomalous or euphoric conditions that characterized some previous market extremes.

Conclusion: Looking beyond any single economic data point