The prospects that the Fed will slash interest rates later this month took a hit after the June jobs report from the Bureau of Labor and Statistics revealed the economy added 224,000 jobs, the most since January.
“After May's weaker jobs data, which was revised even lower today, the June report takes on new importance as a sign of whether the May data was a one-month blip or the start of a new weaker trend,” said Danielle Hale, Chief Economist for realtor.com. “The 224,000 jobs added in June are a strong bounce back and will likely make the Fed less inclined toward rate cuts later this month, especially as the unemployment rate still hovers near 50-year lows at 3.7%.”
The unemployment rate of 3.7% is marginally higher than what was reported in May, and the number of unemployed people came in a 6 million. Data also found the labor force participation rate came in at 62.9%, which is marginally higher than May’s 62.8%.
Unemployment rates for African Americans dropped from May’s 6.2% to 6% in June, and a year-over-year decrease from 6.5% in June 2018. Average weekly earnings grew slightly to $959.76 in June from $957.70 in May.
Employment in professional and business services saw the biggest increase, adding 51,000 jobs in June. Health care added 35,000 jobs in June, and transportation and warehousing added 24,000 jobs.
While the June report exceeded expectations, a report by Bloomberg states these numbers could cause the Fed to take a second look at cutting interest rates.
“This morning’s (July 5) robust jobs report should ease some of the pressure that the Fed faces to cut rates at the upcoming July FOMC meeting,” said Doug Duncan, Chief Economist at Fannie Mae. “The report showed non-farm payrolls increasing by 224,000 in June, outweighing small downward revisions to the prior two months and indicating that the labor market remains a strength of the economy.