- Employment growth rebounded to 224k in June
- The unemployment rate ticked higher to 3.7%
- Wage growth was steady at 3.1% year-over-year
A nice rebound in US payroll growth will do little to change market calls for the Fed to cut rates later this month, though a 50 basis point move looks less likely. It’s not that the jobs backdrop is weak. Despite some soft payroll reports in recent months, employment growth is tracking 172k year-to-date. That’s down from 223k in 2018 but still well above the ~100k pace of labour force growth. So while unemployment ticked up to 3.7% in June, it is still down from last year. Wage growth has been a bit less impressive though, losing momentum in recent months and remaining just above the 3% mark—not enough to generate significant inflationary pressure.
Those looking for the impact of tariffs and trade uncertainty will find some evidence in job growth. Relative to last year, the most significant slowing in monthly payroll growth has been in manufacturing. Transportation and warehousing—also trade-exposed—isn’t far behind. Rather than clear evidence of a slowing US economy, it’s the Fed’s concern about the impact of trade policy (and, relatedly, slowing global growth) that makes them more likely to ease monetary policy in the coming months.
