On the evening of July 5th, the US Department of Labor released data showing that the non-farm payroll increased by 0.206 million people in June, although it significantly exceeded the expected 0.19 million people, but still significantly decreased from the previous value of 0.272 million people.

In April, the number of non-farm jobs added was revised down from 165,000 to 108,000 people, and in May, the number of non-farm jobs added was revised down from 272,000 to 218,000 people. After the revision, the total number of new jobs added in April and May was reduced by 111,000 people compared to before the revision. In the past five months, the number of employed people has been revised downward for four months.

The unemployment rate rose to 4.1% in June, the highest level since November 2021, while the expected and previous values were both 4%.

In June, the average hourly wage increased by 0.3% month-on-month, meeting expectations, and down 0.4% from the previous value. The year-on-year growth rate was 3.9%, meeting expectations, and fell below 4% for the first time since 2021.

At the same time, the labor participation rate in June rose slightly from 62.5% in May to 62.6%, reversing the previous downward trend.

The unexpected rise in the unemployment rate boosted expectations for a Fed rate cut. After the data was released, the three major US stock index futures rose in the short term, and US bond yields fell across the board by 5-8 basis points. The US dollar index fell in the short term, down 0.27% during the day.

The futures market shows that investors are currently expecting the Fed to cut interest rates twice this year.

According to the CME FedWatch tool, the possibility of the Fed beginning the first rate cut of the year in September is 71.8%, higher than the 66.5% before the report was released. There is also an increased likelihood of the first rate cut in November, while the probability of a second rate cut in December has risen to 46.5%.

Government employment boosted significantly, while private sector employment cooled significantly more than expected.

In terms of employment composition, government employment has surged, which may not be good for the economy.

The number of newly employed persons in the private sector is 0.136 million, far below the expected 0.16 million. The data for May was revised down from 0.229 million to 0.193 million. Meanwhile, the number of new government employees jumped from 0.025 million in May to 0.07 million.

Medical care added 0.049 million jobs in June, below the average level of the past 12 months.

Social assistance added 0.034 million jobs in June, mainly in personal and family services (adding 0.026 million people).

The construction industry added 0.027 million jobs in June, higher than the average level of the past 12 months.

Employment in the retail trade sector was nearly unchanged in June, decreasing by 9,000 people. It had previously risen at the beginning of the year.

Retailers of furniture, housewares, electronics, and home appliances reduced their workforce by 6,000 within a month, while warehouse-type stores, supercenters, and other general merchandise retailers added 5,000 jobs.

Employment in the professional and business services sector remained almost unchanged (decreasing by 0.017 million) in June and has remained almost unchanged over the past year.

In addition, the best leading indicator of employment, temporary help services, decreased by 0.049 million people in June, dropping 0.515 million people since its peak in March 2022.

The gap between business and household surveys further widened, and part-time work may become the main driver of the US labor market growth.

Compared to last month, the number of employed workers increased by 0.116 million in June, but this caused the data gap between business and household surveys to widen by 0.09 million, breaking the previous month's record.

Notably, part-time work growth will become the main driver of the US labor market.

The report shows that the number of part-time workers increased by 0.05 million to reach 28.1 million in June, while the number of full-time workers decreased by 0.028 million. This also means that the US has added 1.8 million part-time jobs and lost 1.6 million full-time jobs since June 2023.

Editor/Emily