US non-farm payrolls rose 147k in June, above the expected 110k and broadly in line with the 12-month average of 146k. Unemployment rate unexpectedly dropped from 4.2% to 4.1%, helped in part by a small dip in the participation rate to 62.3%. Overall, the data suggest that the labor market remains stable, with no clear signs of deterioration that would force the Fed’s hand in July.
However, wage growth continues to cool. Average hourly earnings rose just 0.2% mom and 3.7% yoy, both missing expectations of 0.3% mom and 3.9% yoy, and marking a further moderation from prior readings. This combination of solid hiring and easing wage pressure may support the case for a rate cut later in the year, but is unlikely to shift the Fed’s stance in the near term.
