In June, the U.S. employment market showed resilience, according to the latest report from the U.S. Bureau of Labor Statistics. The economy added 206,000 jobs, slightly down from May’s revised figure of 218,000 (originally reported as 272,000), but surpassing economists’ expectations of 190,000.
However, the unemployment rate edged up to 4.1% from May’s 4.0%, slightly higher than the forecasted 4.0%. Average hourly earnings increased by 0.3%, in line with forecasts and slightly below May’s 0.4% rise. On a year-over-year basis, earnings were up by 3.9%, matching expectations but lower than the previous month’s 4.1%.
Prior to today’s data release, expectations regarding Federal Reserve policy were muted, with a slim chance of a rate cut at the July 31 meeting but a significant probability (over 70%) of a cut by mid-September, as indicated by the CME FedWatch tool. Fed Chair Jerome Powell’s recent remarks hinted at a cautious approach, noting that while job market weakness might outweigh inflation concerns in determining future monetary policy.
Despite the headline job growth exceeding expectations, underlying data revealed some softness. May’s job gains were revised lower, and the average monthly gain over the past three months stands at 177,000, compared to 249,000 in the prior quarter. Additionally, the unemployment rate, while only slightly higher, reached its highest level since November 2021.
