According to data released by the U.S. Census Bureau, seasonally adjusted nonfarm payrolls in the U.S. increased by 57,000 in June, lower than the market expectation of 110,000.

The number of new non-farm jobs added in April was revised down from 179,000 to 148,000; the number of new non-farm jobs added in May was revised down from 172,000 to 129,000. After the revisions, the combined number of new jobs added in April and May was 74,000 lower than before the revisions.



US non-farm payroll data for June showed that despite a decline in the unemployment rate, hiring activity slowed significantly in June, dampening the initial momentum of job growth this year. According to data released Thursday by the US Bureau of Labor Statistics, non-farm payrolls increased by 57,000 in June (market expectations were 110,000), after a downward revision of 74,000 jobs in the previous two months last month. The decline in the unemployment rate was due to a significant drop in the labor force participation rate—when the labor force participation rate declines, it means that some people have left the labor market (e.g., giving up job hunting, early retirement, returning to school, etc.). These people are no longer counted in the "unemployed" or "labor force," thus leading to a decrease in the unemployment rate. Following the data release, spot gold rose briefly, and the market reduced its bets on a Federal Reserve rate hike. The market had already fully priced in a December rate hike by the Fed, previously expecting an October hike.

A weaker-than-expected nonfarm payroll report prompted traders to lower their expectations for Federal Reserve rate hikes in the coming months, sending U.S. Treasuries higher. The yield on the two-year Treasury note, most sensitive to monetary policy changes, fell 6 basis points to 4.11%, while the yield on the 10-year Treasury note fell 2 basis points to 4.46%. Fed rate swaps indicate that traders see about a 20% chance of a rate hike at the Fed's meeting later this month, down from 33% before the data release. The market is pricing in fewer than two rate hikes of 25 basis points each by March 2027.

Institutional Views

Investinglive analyst Adam Button: U.S. nonfarm payrolls increased by 57,000 in June, below the expected 110,000. This report is disappointing. The unemployment rate fell to 4.2%, which seems good on the surface, but the labor force participation rate declined by 0.3 percentage points. Specifically, considering the impact of the World Cup, the 55,000 decrease in the accommodation/food service industry is truly surprising. This is contrary to people's expectations and economists' model predictions.

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