The expected weakness in US non-farm payrolls data in June is due to three key factors
2025-07-03 11:43:28
The Bureau of Labor Statistics is scheduled to release June nonfarm payrolls data on July 3, 2025. The consensus forecast is 120,000 new jobs, down from 139,000 in May. In addition, the unemployment rate is expected to rise slightly by 0.1 percentage point to 4.3%. This consensus outlook was agreed.
Nonfarm payrolls are expected to weaken in June due to three key factors:
The first is the continued decline in non-farm payrolls. Job growth has been steadily declining from 228,000 since March 2025. Without a significant external catalyst, June's data is unlikely to exceed May's.
Second, high-frequency data on continuing unemployment claims show a continued rise since early June 2025. Applications increased by 70,000 from 1.904 million on June 5 to 1.974 million on June 26. This upward trend highlights the continued weakness in the US labor market, making a downturn in non-farm payrolls highly likely.
Third, the continued slowdown in the U.S. macroeconomy has suppressed companies’ willingness to hire, and the long-term weakness in domestic demand has further limited companies’ ability to expand their workforce. These dynamics have put additional downward pressure on the non-farm payrolls data in June.
Looking ahead, we expect the US labor market to remain weak in the coming months, reinforcing the downward trajectory of non-farm payrolls. The weak labor market will reduce household income and limit private spending. This self-reinforcing labor consumption cycle will hinder US economic growth. Although high tariffs may push up the prices of imported goods, sluggish domestic demand will limit inflationary pressures. In this low growth and low inflation environment, the Federal Reserve may start a new interest rate cut cycle in the near term.
In the equity market, the combination of accommodative monetary policy and expansionary fiscal measures (such as tax cuts) is expected to mitigate the impact of the economic slowdown, supporting the medium-term bullish outlook for U.S. stocks. Therefore, if the labor market weakens as expected, leading to a near-term market correction, this will provide investors with a strategic opportunity to position for future gains.
Nonfarm payrolls are expected to weaken in June due to three key factors:
The first is the continued decline in non-farm payrolls. Job growth has been steadily declining from 228,000 since March 2025. Without a significant external catalyst, June's data is unlikely to exceed May's.
Second, high-frequency data on continuing unemployment claims show a continued rise since early June 2025. Applications increased by 70,000 from 1.904 million on June 5 to 1.974 million on June 26. This upward trend highlights the continued weakness in the US labor market, making a downturn in non-farm payrolls highly likely.
Third, the continued slowdown in the U.S. macroeconomy has suppressed companies’ willingness to hire, and the long-term weakness in domestic demand has further limited companies’ ability to expand their workforce. These dynamics have put additional downward pressure on the non-farm payrolls data in June.
Looking ahead, we expect the US labor market to remain weak in the coming months, reinforcing the downward trajectory of non-farm payrolls. The weak labor market will reduce household income and limit private spending. This self-reinforcing labor consumption cycle will hinder US economic growth. Although high tariffs may push up the prices of imported goods, sluggish domestic demand will limit inflationary pressures. In this low growth and low inflation environment, the Federal Reserve may start a new interest rate cut cycle in the near term.
In the equity market, the combination of accommodative monetary policy and expansionary fiscal measures (such as tax cuts) is expected to mitigate the impact of the economic slowdown, supporting the medium-term bullish outlook for U.S. stocks. Therefore, if the labor market weakens as expected, leading to a near-term market correction, this will provide investors with a strategic opportunity to position for future gains.
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