U.S. Job Growth Rebounds in June
Following a disappointing May jobs report (that just so happened to be released the same day President Trump canceled planned tariffs on Mexico), it seems that the United States jobs market bounced back in June. This morning the Labor Department released its latest report showing that the economy added a better-than-expected 224,000 jobs. That’s nearly three times the 75,000 jobs added in the month prior. Additionally, despite the unemployment rate rising one-tenth of a point to 3.7%, it remained at a historically low level for the month.
According to MarketWatch, forecasts had predicted the June report would show a gain of 170,000 jobs — a figure the actual numbers easily surpassed. The strong performance is notable for several reasons, not the least of which is the fact that the report arrived just days after the U.S. economy officially set the record for the longest period of expansion. As mentioned the unemployment rate did increase slightly, however that’s because 300,000 workers reentered the labor force during the month. Meanwhile wages were up 6¢, bringing the average to $27.90 an hour. That increase kept the annualized wage growth rate steady at 3.1%.
Commenting on the impact of June’s report, Indeed Hiring Lab director of economic research Martha Gimbel told MarketWatch, “The jobs growth number this month is comforting after a few months of uncertainty. While job growth may be slowing down from its astonishing rate last year, it’s reassuring that the economy is still creating jobs at a reasonable pace.” Principal Global Investors chief global economist Bob Baur expressed similarly settled sentiment, explaining, “With May’s disappointing report behind us, those who have been watching for indications of any near-term economic slowdown should take note that neither job nor wage growth have slowed to a point of concern yet.”
While a strong jobs report is typically a good thing, the morning markets didn’t seem to appreciate the news. That’s because many investors had their hearts set on the Federal Reserve cutting interest rates later this month. However, with June’s figures assuaging some fears that the economy was softening, the Fed’s next move is now less obvious. Nevertheless the CME FedWatch Tool still pegs the odds of a rate cut at 100%, with a 96.1% chance of the new target rate falling to 2.00%-2.25%.
At a time when many Americans are bracing for a recession — or believe one has already begun — the Labor Department’s latest report would suggest that the country’s longest-ever expansion isn’t over yet. Of course that raises questions about what will happen with the Fed and bring much more speculation to what was a foregone conclusion only a few days ago. It also means we can expect President Trump to ramp up his attacks on Fed chairman Jerome Powell in the coming weeks as the agency mulls its decision. In other words, while fireworks are typically reserved for the Fourth, it seems they may get an encore throughout the rest of what’s sure to be an interesting July.