Announced this morning, the economy added 147,000 jobs in June, higher than expected. The Construction industry and Government jobs (mostly in the state and local level) were relatively strong, while the Wholesale Trade industry was relatively weak. The Unemployment Rate decreased one tenth to 4.1% and the Labor Force Participation Rate at 62.3% is one tenth lower than the previous month. Average Hourly Earnings increased 0.2% in June, slightly less than expected, and grew 3.7% on an annual basis. In addition, Average Weekly Hours were 34.2, which is one tenth less than the previous month.
Another month with more jobs were added to the economy than expected, mostly driven by increases in government jobs at the state and local level. Private payrolls were relatively weak. The unemployment rate fell when a slight increase was expected, due mostly to labor force dynamics. Average hourly earnings were slightly less than expected and the annual increase is slightly below the 50-year average. In addition, both labor force participation and average weekly hours declined slightly from the previous month.
Overall, the headline payroll figures suggest that the labor market is hanging in there, while weakness in private payrolls and slight declines in participation, average hourly earnings, and weekly hours highlight the moderation in jobs that has occurred in recent months. Uncertainty remains over tariff negotiations, which is impacting consumer and company behavior. Meanwhile, Congress is trying to move expeditiously to pass legislation which may give some clarity on the economic outlook. The Federal Reserve has remained on hold with monetary policy, to ascertain the full impact of tariffs. How well consumers and earnings hold up amidst this environment will be key for the markets in the coming weeks.
In all, the yield on the 10-year US Treasury ticks higher following the report and equity futures are also higher as we head into the market open. Have a safe and happy 4th of July!
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