The U.S. Jobs Report for June is out! Last month, the U.S. economy added 224,000 jobs, which is the best gain since January. Payroll growth is up as a result, which runs contrary to concerns that employment growth was weakening. Additionally, the unemployment rate is at 3.7% as labor force participation rose, according to the Labor Department.
Previously, economists surveyed by Dow Jones had expected nonfarm payrolls to rise by only 165,000 and the unemployment rate to hold steady at 3.6%. June’s payroll numbers far exceeded the economists’ predictions.
May initially reported a growth of 75,000 jobs, but the May count was revised to 72,000. Federal Reserve policymakers have been watching the jobs numbers closely and markets are anticipated that the Fed will cut its benchmark interest rate in late June in an effort to stave off a widely expected economic slowdown through the year, no matter what June’s payrolls showed.
At the July 30-31 meeting of the Federal Open Market Committee, Andrew Hunter, senior U.S. economist at Capital Economics, said the report “would seem to make a mockery of market expectations” for a quarter- or half-point cut, according to CNBC. He also added that the job growth levels “is still much stronger than the levels that have usually prompted the Fed to cut rates in the past and, although we do still expect the weakening economy to prompt the Fed to loosen policy, the first-rate cut will probably be delayed until September.”
Professional and business services had the most job gains with 51,000 jobs. Health care added 35,000 jobs. Transportation and warehousing added another 24,000 jobs. Construction contributed 21,000 jobs and manufacturing added 17,000 jobs added. Government job gains were at 33,000.
As for unemployment, discouraged workers, as well as the underemployed, nudged up to 7.2%, which is the lowest level it’s been at since early 2001. The labor force participation rate increased one-tenth to 62.9%, its best since March. The total labor force increased by 335,000 to just under 163 million while those counted as not in the labor force fell by 158,000 to 96.1 million.
The report seems to calm fears that the labor market was weakening. Earlier this week, ADP and Moody’s Analytics had indicated private payroll growth of just 102,000, which was well below the government’s count of 191,000.
Tony Bedikian, head of global markets at Citizens Bank, told CNBC, “Today’s jobs report shows the U.S. economy continues to create jobs at a strong pace even as we enter the longest period of economic expansion on record,”
Bedikian added, “The bounce back in the June jobs number may splash cold water on the notion of an imminent Fed rate cut. We will have to see whether the equity markets can shrug that off when balanced against other macroeconomic factors, such as the hope of a China trade truce.”
Some economists are saying that current housing trends are consistent with a looming recession, and the bond market for months has been sending signs of a slowdown ahead, reports CNBC. However, the stock market was holding strong after the results of the G-20 negotiations, which ended with the U.S. and China promising no additional tariffs.
Donald Trump has been highly critical of the Fed and took the opportunity to slam them on July 5, following the report.
“We don’t have a Fed who knows what they’re doing,” Trump said. He added that the economy would take off like a “rocket ship” with lower interest rates.