In June, US payrolls rose by 147,000, continuing a modest upward trend after a revised increase of 144,000 in May. Unlike the ADP report that came out yesterday, the report beat forecast expectations, where most expected the number to come in at 110,000.
The national unemployment rate edged down to 4.1%, staying within the tight band of 4.0% to 4.2% seen since May 2024. However, long-term unemployment rose by 190,000 to reach 1.6 million, offsetting gains from the previous month, and representing 23.3% of all unemployed individuals.
Here is a brief roundup of what chief economists, chief investment officers, and others are saying in reaction to today's report:
Today’s jobs report was much better than expected, especially coming on the heels of a disappointing ADP employment report yesterday.
Given the strong jobs numbers along with the extension of tax cuts and potentially higher tariff levels (once the 90-day pause expires), the Fed is much less likely to cut rates this month than many were talking about earlier this week.
Instead, the Fed is likely to wait until later in this quarter or even until the fourth quarter before they cut interest rates. Given that backdrop, the stock market is likely to ignore the greater macroeconomic picture in the short run and focus much more on corporate earnings, which will kickoff in less than two weeks (e.g. on 7/15).
We have been encouraged by the rapid recovery of the stock market these past 3 months, but are concerned that valuations are high (currently 22 times earnings, which is significantly higher than the 30-year average of 17 times earnings) and that a lot of the good news (e.g. tax cuts, deregulation, lower-than-feared tariff levels) is already priced in, so the market is much more vulnerable to negative surprises at this point.
The solid June jobs report confirms that the labor market remains resolute and slams the door shut on a July rate cut. Today’s report saw a trifecta of positives that should send the labor bears back into hibernation: a drop in the unemployment rate, a solid beat on headline job creation vs. consensus, and positive revisions to the prior two months.
Softer average hourly earnings (wage) gains suggest that a wage-price inflationary spiral shouldn’t be a near-term concern, setting up something resembling a goldilocks scenario. Today’s good news should be treated as such by the markets, with equities rising despite the accompanying pickup in interest rates.
The June jobs report’s details were considerably weaker than the headline. State and local government jobs accounted for nearly half of the monthly gain, and within private employment, all of the net increase was in healthcare, social assistance, leisure and hospitality.
Wonky seasonal factors flattered the headline, too. The increase in government jobs was mostly a mirage caused by a smaller-than-usual seasonal decline in public education jobs after Memorial Day. K-12, college, and university employees stuck around on campus longer than usual this year, likely because of limited summer work opportunities in other industries.
Private employment fell modestly in June according to an alternative measure from ADP, another reason to take the good payrolls headline from the BLS with a big grain of salt.
Immigration has been a big part of the labor supply and as these demographics shift, we anticipate the unemployment rate to continue to ratchet lower with the potential to put upward pressure on wages. Thus, we continue to anticipate rate cuts are a ways off until we gain clarity that inflation is contained.
If businesses keep expanding payrolls like they’ve done so far this year, the Fed can comfortably sit in “wait and see” mode at the upcoming policy meeting.
Uncertainty around tariffs and trade have apparently not spooked businesses into shedding workers. One note of caution: the administration is still actively negotiating details with several major trading partners and the eventual business impacts are unknown.
These numbers demonstrate economic resilience despite expectations for slowdowns on the backs of tariff and fiscal uncertainty. While many will not want to believe this solidifies a strong labor market, especially on the backs of a negative ADP print, what this print does solidify is the Fed does not have the data to contemplate a cut in July. Bond markets are, therefore, repricing yields higher, and investors should continue with the mindset of higher for longer.
While equity markets will take some time to digest the reliability and impact of this upside surprise, it should be top of mind that markets hitting an all-time high amidst the current environment should warrant cautious optimism regardless of these numbers. Midyear rebalancing into quality, large-cap names while looking for reasonable valuation and earnings stories globally may help provide resilience if there are any downside surprises to come.”
Today’s jobs report could result in a relief rally for US stocks - particularly in a holiday-shortened trading session - putting all-time highs back within reach. Specifically, small caps have done well lately and today’s jobs report could keep bulls in the driver’s seat. Lastly, the June jobs report should give the Fed more breathing room as they rely on a solid jobs market and economy to hold off on rate cuts while awaiting any potential inflationary impacts from tariffs.
The June jobs report is like a summer blockbuster - plenty of action and a surprise twist. Despite tariffs, D.C. drama, and global headwinds, the US labor market just pulled off a better-than-expected performance. Employers added 147,000 jobs, showing that Main Street is still marching forward - even if Wall Street keeps glancing nervously at the Fed.
For investors, this is a green light to lean into opportunity, but stay diversified. Don’t bet the farm on just one outcome. Focus on quality stocks, fixed income with duration, and sectors that love a soft landing—like tech, industrials, and health care. The economic engine is still humming, but now's the time to tune up your portfolio before fall volatility rolls in.
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