Hold onto your wallets—the June jobs report just dropped a bombshell, shattering hopes for a July rate cut with a robust labor market that refuses to slow down.
According to Kiplinger, the report from the Bureau of Labor Statistics shows nonfarm payrolls climbing by 147,000, beating forecasts of 110,000, signaling a resilient economy and reinforcing the Federal Reserve’s likely decision to hold interest rates steady.
Let’s break down the numbers. Job growth in June edged past May’s revised figure of 144,000, with April’s numbers also adjusted upward by 11,000. This marks four straight months of better-than-expected jobs data.
Sector-wise, the state government led the charge with a hefty 47,000 new jobs. Health care wasn’t far behind, adding 39,000 positions, while social assistance saw a rise of 19,000. Federal government jobs, however, slipped by 7,000, continuing a decline of 69,000 since January. The unemployment rate offered a sliver of good news, dipping to 4.1%. Meanwhile, wage growth ticked up by 0.2% month over month and a solid 3.7% year over year.
Yet, not all signals are rosy. Consumer confidence dropped for the sixth time in seven months, and discretionary spending took its sharpest hit since February 2023. Are Americans tightening their belts despite a strong labor market?
Market reactions are telling. Futures traders, per CME FedWatch, now see a 93% chance the Fed will keep rates unchanged this month, up from 76% just a day earlier. Odds for a September cut sit at 71%, but skepticism abounds.
Expert voices are weighing in with varied takes. “Today's report defies, at least for now, signs of weakness in leading indicators,” notes Simon Dangoor of Goldman Sachs Asset Management.
“The Fed's conviction to hold its wait-and-see stance while bracing for summer inflation will only be strengthened,” Dangoor adds. He suggests that if inflation eases or labor softens more than expected, cuts could return later this year.
Jeff Schulze of ClearBridge Investments sees a bright spot. “The solid June report confirms labor market strength and slams the door on a July cut,” he argues, pointing to positive revisions and softer wage gains as a buffer against inflation spirals.
Lara Castleton from Janus Henderson Investors cautions against over-optimism. “These numbers show resilience despite tariff and fiscal uncertainty, but the Fed lacks data to cut rates now,” she says. Bond markets are repricing yields higher, signaling a “higher for longer” mindset.
David Laut of Abound Financial echoes this caution. “We expect the Fed to delay cuts into the fourth quarter, with two reductions possibly in 2025, depending on upcoming data,” he notes. Earnings season in mid-July may reveal how firms navigate tariff uncertainties.
Chris Zaccarelli of Northlight Asset Management ties this to equities. “With strong jobs and potential tariff hikes after the 90-day pause, the Fed is unlikely to cut soon—stocks will focus on corporate earnings kicking off in two weeks,” he predicts.
Scott Helfstein of Global X sees a bigger picture. “A good labor market with real wage gains, plus a potential $3 trillion stimulus, could drive equity markets higher, though the White House’s July 9 tariff pledge adds volatility risks,” he warns.
For investors, the takeaway is clear: brace for uncertainty. With no July cut in sight, focus on sectors showing strength like health care, stay frugal amid declining consumer confidence, and watch earnings reports for clues on navigating tariff and policy shifts. Build wealth by staying informed—don’t let surprises catch you off guard.