Employment Review Slower Payrolls Point To Steady Fed

June payrolls grew by a modest 57k, reinforcing expectations that the Federal Reserve will maintain current interest rate levels. The decline in the unemployment rate was primarily due to a contraction in labor force participation rather than labor market strength.

Key Takeaways

• 1.June payrolls rose by 57k, falling short of the 90k estimate and 115k consensus, with cumulative downward revisions to prior months.
• 2.Slower labor demand supports the outlook that the Fed will remain on hold for the remainder of the year.
• 3.The unemployment rate decline to 4.2% was largely driven by a reduction in labor force participation, particularly among prime-age workers.

Table of Contents

• Employment review: slower payrolls point to steady Fed
• Key Takeaways
• Solid payrolls, but slower. UE rate decline exaggerated by LFPR
• Monetary policy readthrough: No overheating in the labor market. Next test is the CPI
• Slower payrolls
• Income implications: clear signs of inflation reducing real purchasing power
• Little change in the household survey
• Breakeven payrolls still near 50k
• Disclosure Section
• Global Research Conflict Management Policy
• Important Disclosures

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