XData released today showed employers added 224K new jobs in June. Despite the rebound in hiring, analysts at Wells Fargo, still see the Federal Reserve lowering the Fed Funds rate in July.
Key Quotes:
“The pace of improvement in the labor market, however, has cooled. With wage growth still not threatening inflation, the Fed will still likely cut rates in July.”
“The rebound confirms that the jobs market is hardly crumbling, but there were a number of signs that the pace of labor market tightening has cooled.”
“The unemployment rate edged back up to 3.7%. The uptick was driven by an increase in labor force participation, but leaves the jobless rate within the 3.6-4.0% range that has prevailed for more than a year now. Wage growth also came in a touch weaker than expected in June, 0.2%, and kept the year-ago change at 3.1%. At that pace, there is still little threat to inflation because productivity growth has kept unit labor costs comfortably below 2%.”
“We look for businesses to add around 155K jobs per month in the second half of the year. That pace should be sufficient to keep the unemployment rate around 3.6% and wages rising a little over 3%. However, with labor market slack no longer clearly diminishing and inflation continuing to fall short of 2%, we expect the FOMC to guard against the slowdown.”
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