US Pulse: Unprecedented Fall in Labour Supply

The US labour market faces an unprecedented decline in labour force participation, yet wage growth remains contained. Consequently, market expectations for Fed interest rate hikes have cooled.

Key Takeaways

• 1.The US labour force has experienced an unprecedented decline of 2.14 million people since December 2025, pushing the participation rate to 61.5%.
• 2.Despite the supply crunch, wage growth remains moderate at 3.5% y/y, suggesting the labour market is not currently generating inflationary pressure.
• 3.Market expectations for Fed rate hikes have receded due to the softer June jobs report and commentary that inflation risks have eased.

Table of Contents

• Labour market
• The week ahead
• The week that was

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