The US labor market is showing signs of cooling halfway through 2024, with job gains slightly declining but overall employment activity remaining solid. In June, the US economy added 206,000 jobs, surpassing economists' expectations. However, the unemployment rate unexpectedly rose to 4.1%, the highest level since November 2021. This increase was partly due to 277,000 people entering the job market without immediately finding employment. Additionally, the government revised down its estimates of job growth for April and May by a combined 111,000. Average hourly pay rose by 0.3% from May and 3.9% from June 2023, the smallest increase since June 2021. The report also indicated a potential economic slowdown, with signs of softening in the labor market. The breakdown of the June jobs report revealed uneven growth, with health care and social assistance adding 82,400 jobs, and government increasing by 70,000 positions, while manufacturing and professional and business services saw declines. Construction, however, showed a potential bright spot, gaining 27,000 jobs. The unemployment rate also ticked up among workers with at least a bachelor's degree, suggesting a modest cooling of the labor market. The report's implications have led to market reactions, with the S&P 500 and Nasdaq Composite rising, and investors pricing in a nearly 75% chance of a Fed interest rate cut in September. Federal Reserve Chair Jerome Powell has indicated a potential "disinflationary path," and the report has further strengthened the case for a rate cut. President Joe Biden's appearance at a campaign rally coincided with the release of the jobs report, highlighting the economic significance of the data in the context of the presidential campaign. Overall, the June jobs report reflects a labor market that is settling into a slightly cooling trend, with uneven job growth across sectors and potential implications for Federal Reserve interest rate decisions and the presidential campaign.
