U.S. Payroll Growth Collapsed in June: Only 57,000 Jobs Added
In brief
- U.S. added 57,000 jobs in June, missing 110,000 economist forecast
- Unemployment held at 4.2% as labor force participation fell to 61.5%
- Fed rate-hike odds dropped from 65% to 50% by September
- Bitcoin rose 4% and equity futures gained 0.7% on cooling rate expectations
Jobs and Labor Force Weakness
The June jobs figure marks a dramatic slowdown in hiring momentum. May's jobs gain was revised lower to 129,000, making the June print even more concerning in context. The unemployment rate came in at 4.2%, beating the expected 4.3%, but that silver lining masks a deeper issue: the Labor Force Participation rate declined to 61.5% from 61.8%, suggesting workers are dropping out of the labor force rather than finding jobs.
Market Repricing on Rate-Hike Odds
The jobs miss sent immediate ripples through financial markets. Bitcoin held above $61,000, higher by 4% over the past 24 hours following the report, while Nasdaq 100 futures moved to a 0.7% gain from roughly flat beforehand. The 10-year Treasury yield dipped four basis points to 4.46%, reflecting investor expectations that the Fed will hold rates steady longer than previously thought.
Market pricing shifted sharply. Yesterday, traders assigned about a 65% probability to one or more rate hikes by September. In the minutes following the jobs report, that probability collapsed to roughly 50%.
The Inflation Complication
The Fed's path forward remains uncertain. New Fed Chair Kevin Warsh surprised many, leading the Fed to a very hawkish conclusion at its policy meeting two weeks ago, signaling readiness to raise rates. Yet inflation turned upward in the first half of the year, partly due to surging energy prices. This creates a policy bind: weak jobs data argues for patience, but rising inflation argues for tightening. The Fed will likely need more data before committing to either path.
