8 months ago • 2 mins
What’s going on here?
The US jobs market didn’t overleap expectations last month, with new jobs coming in under the bar instead.
What does this mean?
Economists have been playing and losing a high-stakes game of pin the tail on the donkey with US jobs data – undershooting the mark for 14 straight months. But Friday’s data was a game changer: the US economy added a mere 209,000 jobs in June. That not only missed forecasts but marked the slowest pace of job creation since we bid adieu to 2020. And to add a dash of extra sweetness to the mix, job numbers for April and May were revised down by a combined 110,000. That good news might mean that interest rate hikes by the Federal Reserve (the Fed) are finally cooling down the red-hot jobs market.
Why should I care?
For markets: Fed’s foresight.
A slowdown in job creation might just be the plot twist the Fed was hoping for when it hit pause on its interest-rate-hike marathon last month. But the million-dollar question is whether this will prompt a change in the Fed’s playbook. Most are betting that one data hiccup like this won’t be enough to sway plans, especially as the wage growth slowdown seems to have hit a plateau. In fact, markets are still putting their money on a 90%-plus chance of another rate hike later this month. Still, though, if the data keeps trending in this direction, the Fed could well change course down the line.
The bigger picture: Working 9 to 5.
Keep an eye on working hours. Businesses, especially those that have struggled to hire, often deal with tough conditions by cutting hours before resorting to layoffs. And lately the average workweek has been sliding toward the lower end of its historical range – prompting some economists to warn that we could see a surge in layoffs if it dips much further.
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