The latest employment data came in well below estimates early Thursday, surprising experts, who say that the weaker-than-expected jobs numbers could impact the interest rate environment for advisors and their clients.
Total nonfarm payroll employment rose by 57,000 in June and the unemployment rate was 4.2%, according to the Bureau of Labor Statistics. Employment continued to trend up in professional and business services, social assistance, and healthcare, while the leisure and hospitality industries lost jobs, the Bureau said, in a statement.
Economists surveyed by Dow Jones Newswires and the Wall Street Journal were looking for nonfarm payrolls to increase by 115,000 and the unemployment rate to stay unchanged at 4.3% for the fourth straight month.
June’s jobs numbers mark a stark contrast to last month’s data, when total nonfarm payroll employment rose by 172,000 and blew past estimates. However, on Thursday, May’s job gains were revised down from 172,000 to 129,000 and April’s figure was revised down to 148,000 from 179,000. With these revisions, employment in April and May combined is 74,000 lower than previously reported, according to the Bureau of Labor Statistics.
Stephen Coltman, head of macro at 21shares, said that the jobs data could influence the Fed’s stance on rates as the year progresses. “The market was braced for a strong jobs report, but this was a big miss and came with significant downward revisions to prior months,” he said. “The market has priced additional tightening from the Fed this year, but that looks increasingly unwarranted by the data.”
The latest jobs data also focuses attention on new Fed Chair Kevin Warsh at a time when advisors and investors are closely monitoring the central bank’s approach to interest rates under its new chief.
“Inflation expectations have collapsed and the current policy setting is becoming increasingly restrictive as a result,” said Coltman. “This sets up a dovish pivot for the Fed later in the year and should be supportive for ‘debasement’ trades in precious metals and crypto that have suffered from the Fed’s hawkish stance this year.”
Bradford Smith, portfolio manager at Janus Henderson Investors noted that the latest jobs numbers mark the weakest print since February and are particularly notable given the “barnburner” of a print last month. “As we are learning how the Fed reaction function will form under Warsh, this print takes some of the pressure off of the inflation fighting institution to hike near term,” Smith added. “That said, Warsh commented at his first presser that jobs data only becomes meaningful after the third revision and by then becomes ‘echoes of history’.”
“With oil price inflation moderating, some softness on the jobs front likely keeps the Fed on hold at least for the next meeting."
Last month, the Federal Reserve kept to its path of keeping its policy rate steady in the central bank’s first meeting with Warsh as chair.
Advisors have been closely watching the Fed’s stance amid pressure from President Donald Trump to lower rates. The Fed made three consecutive rate cuts last year but Warsh’s predecessor as Fed Chair Jerome Powell had resisted calls from Trump to cut rates. The Fed made its last rate cut in December 2025. Warsh has also inherited an inflationary environment that is hardly conducive to rate cuts, a scenario that has also sparked speculation of rate hikes further down the road.
Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, thinks that the latest jobs data makes the prospect of an imminent rate hike less likely. “For the Fed, June’s cool payrolls growth and lower energy prices make the pressures for rate hikes at the next few decisions less urgent,” he said, in a note.
The weakness in leisure and hospitality employment numbers is also garnering plenty of attention Thursday, set as they are against the backdrop of the ongoing World Cup. “Hospitality employment went sharply negative, confirming anecdotal evidence from hoteliers that the World Cup boost was proving to be a fool’s paradise,” said Brad Conger, Chief Investment Officer at Hirtle & Co., in a note.
However, Jamie Cox, managing partner for Harris Financial Group, was skeptical about the numbers for those industries. “These data are misleading and should be disregarded—there is zero chance leisure and hospitality posts a negative print in the midst of the World Cup,” he said, in a note. “Revisions higher in the next few months are coming.”
June’s jobs data also comes at the midpoint of the World Cup, which kicked off on June 11 and encompasses 11 U.S. venues. The tournament ends on July 19 with the final at MetLife stadium in New Jersey, which has been rebranded as New York New Jersey stadium for the tournament, to comply with FIFA’s sponsorship rules.
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