US labor growth slows more than expected in June – NFP

The closely watched employment report from the US Labor Department released on Thursday showed nonfarm payrolls increased by 57,000 jobs in June after a downwardly revised 129,000 (from 172,000) rise in May and disappointed expectations for 114,000 increase.

The same report showed that unemployment fell to 4.2% last month from 4.3% in May, pushing participation rate (number of working age population, working or searching for work) to 61.5% in June (the lowest in over five years), while average earnings ticked up to 3.5% in twelve months to June, from 3.4% previous month.

Slowdown in US labor growth and downward revision of past two month’s  figures, warns of cooling of the labor market that would negatively impact expectations for Fed rate hikes in the near term.

Economists believe that sudden weakening in the labor sector after two previous solid results (although with downward revision) might be delayed impact from the war in the Middle East.

The latest data significantly faded possibilities for Fed rate hike this month but also ease bets for September rate hike from 75% ahead of data to 60% upon release of US June labor report.