U.S. Job Market Surprises in June: 206K Jobs Added, Unemployment Up to 4.1%


Last updated: July 7, 2024

jobs_report_june_2024The U.S. economy added 206,000 jobs in June, surpassing expectations but seeing a rise in unemployment to 4.1%, according to the Labor Department.

Nonfarm payrolls grew by 206,000, exceeding the 200,000 forecast, though down from May’s revised 218,000. Unemployment hit 4.1%, its highest since October 2021, confounding predictions it would hold at 4%.

“It’s a soft landing kind of report,” said Goldman Sachs’ chief economist Jan Hatzius on CNBC. “This supports the idea that [the Fed] will cut relatively soon, with September being most likely.”

The labor force participation rate ticked up to 62.6%, with the prime-age rate for those aged 25-54 reaching a 22-year high at 83.7%. Broader unemployment remained at 7.4%.

June’s job growth was driven largely by a 70,000 surge in government jobs. Health care added 49,000 jobs, social assistance 34,000, and construction 27,000.

However, declines were seen in professional and business services (-17,000) and retail (-9,000).

Wages rose by 0.3% for the month and 3.9% year-over-year, meeting expectations. The average workweek stayed steady at 34.3 hours.

Stock futures edged higher post-report, while Treasury yields fell. Market bets for a September Fed rate cut increased.

“The job market is bending without yet breaking, which boosts the argument for rate cuts,” said David Russell, global head of market strategy at TradeStation. “Things are not too hot and not too cold. Goldilocks is here and September is in play” for a Fed rate cut.

Revisions for April and May payrolls subtracted 111,000 jobs from previous estimates. Long-term unemployment spiked by 166,000 to 1.5 million.

The unemployment rate for Black workers rose to 6.3%, the highest since March, while the rate for Asians jumped to 4.1%, the highest since August 2021.

Despite a solid labor market, the Federal Reserve remains cautious on rate cuts, requiring more progress on inflation. Markets are pricing in two rate cuts by the end of 2024, though Fed officials only foresee one.

“There are no cracks here that would cause the Fed to rush to the rescue with rate cuts, and the labor market is in line with a continuation of slowing inflation,”  said Robert Frick, Navy Federal Credit Union’s corporate economist. “That should lead to one or two cuts this year.”

“The labor market is in line with a continuation of slowing inflation, which should lead to one or two cuts this year.”

Economic growth is also slowing, with GDP rising just 1.4% in Q1 and projected to grow at 1.5% in Q2.

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Jon Morgan, MBA, LLM, has over ten years of experience growing startups and currently serves as CEO and Editor-in-Chief of Venture Smarter. Educated at UC Davis and Harvard, he offers deeply informed guidance. Beyond work, he enjoys spending time with family, his poodle Sophie, and learning Spanish.
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LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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