June Jobs - Signs of Cooling, But Wage Growth Supports a July Hike

Payrolls additions below expectations, wage growth remains firm.  The U.S. labor market added 209K jobs, the unemployment rate fell 0.1% to 3.6%, and wage growth held steady in June.  On July 26, Fed policymakers will decide whether or not to raise interest rates by another 0.25% after pausing in June.  Today’s report suggests the labor market is losing some steam, but remains sufficiently healthy (and wage growth sufficiently strong) enough for policymakers to resume rate hikes later this month.

• 209K jobs added in June – Slightly below expectations.  U.S. employment has grown by an average of 278K per month over the first 6 months of 2023, lower than the average of 399K per month in 2022.  Notable job gains were observed in government (+60K), health care (+41K), social assistance (+24K), and construction (+23K), with little to no change in other industries.

• 3.6% unemployment – remains historically low.  The U.S. unemployment rate ticked down to 3.6% from 3.7% a month ago.  Forecasts ranged from 3.5% to 3.8% with a median of 3.6%.  Unemployment has remained in a range of 3.4%-3.7% for the last fifteen months.  The labor force participation rate was unchanged at 62.6% – matching the highest level since March 2020.  Wage growth was consistent with the prior two months with hourly earnings up 4.4% over the last year (above expectations of +4.2%) and 0.4% month-over-month (above expectations of +0.3%).