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Nonfarm payrolls rose 224,000 in June, easily surpassing the market expectations of 165,000 according to a report released by the Labor Department on Friday.

Key Takeaways

• June saw a 224,000 increase to nonfarm payrolls vs. 165,000 expected.
• The unemployment rate climbed to 3.7% vs. 3.6% expected, although this is still the lowest in almost 50 years.
• Wage growth rose 3.1%, slightly below market expectations.

The recent jobs data assuages concerns of an emerging slowdown in hiring, and could potentially influence Federal Reserve monetary policy regarding interest rate cuts. Recent jobs data has strengthened the case for rate cuts, and the nonfarm payrolls report may offset that.

The unexpected surge in growth is the highest since January, and labor force participation rose alongside the modest rise in unemployment.

Professional and business services led the gains with 51,000, followed by health care which added 35,000 and transportation and warehousing with 24,000. 21,000 jobs were added in construction, and the struggling manufacturing industry added 17,000 jobs added. The hourly earnings figures were below expectations, rising 0.2% vs. 0.3% expected. Wages rose 3.1% vs. 3.2% expected, pointing to inflation pressures that may also cause the Federal Reserve to reconsider rate cuts. The average workweek saw no change at 34.4 hours.

Underemployment rose to 7.2% which is still the lowest in 18 years, and labor force participation rose by 62.9%, the best result since March. The labor force rose by 335,000 overall to a total of around 163 million, and those not counted in the labor force now stand at 96.1 million.

This jobs report creates a complicated picture for the Fed. Inflation is still unimpressive, but the headline number suggests a still-strong U.S. economy. https://t.co/9CzKFDb5Q4 2-year yields tick higher. pic.twitter.com/4mi3jMjUIN

— Lisa Abramowicz (@lisaabramowicz1) July 5, 2019

Expert Outlook

Andrew Hunter, senior US economist at Capital Economics, stated that the report made a “mockery of market expectations,” adding that the level of job growth is “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.”

 “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,” said Tony Bedikian, head of global markets at Citizens Bank. “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.”

Market Reaction

Gold prices are now down 1.62% and spot gold last traded at $1,394.77/oz with a high of $1,423.23/oz and a low of $1,387.99/oz. The stock market also opened lower following the report.