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Investing.com -- Wall Street’s focus on Friday was on the U.S. nonfarm payrolls report for June, which showed job growth last month came in much weaker than expected.
According to the U.S. Bureau of Labor Statistics, payrolls increased by 57k last month, compared to a consensus estimate for a rise of 114k. The unemployment rate ticked down to 4.2% after plateauing at 4.3% over the last three months. Total nonfarm payroll growth was revised lower for May to 129k from 172k, and also for April to 148k from 179k.
Market participants weighed the implications of the report for the Federal Reserve. With the overall labor market continuing to show resilience, the central bank has some breathing room to focus solely on the inflation part of its dual mandate. The jobs data also means that the Fed potentially has space to keep interest rates steady and not tighten monetary policy.
Wall Street reacted positively to the report, opening higher. But stocks were unable to hold on to those gains as a slide in Tesla and technology stocks weighed on sentiment. Meanwhile, the U.S. dollar slipped and so did shorter-end Treasury yields. Here are some popular exchange-traded funds that track the benchmark S&P 500 index: SPDR® S&P 500® ETF Trust, Vanguard S&P 500 ETF, and iShares Core S&P 500 ETF.
See below for various reactions to the June payrolls data:
Heather Long, chief economist at Navy Federal:
"The June jobs report is great for the Federal Reserve, but it’s disappointing for the rest of America."
Chris Zaccarelli, chief investment officer at Northlight Asset Management:
"This morning’s report is a stark reversal from recent reports because there were a lot less jobs created than expected, and prior months’ numbers were revised lower. While the headline may be negative -- slowing job growth -- there could be a silver lining to markets as it could force some of the more hawkish Fed governors to reconsider quickly raising rates to fight inflation.
Lately the narrative has been around inflation -- which remains too high -- but if the employment mandate is brought back into play, it can increase the odds of leaving rates on hold, which all things being equal would be much better for the market (e.g. than raising rates)."
Jeffrey Roach, chief economist at LPL Financial:
"Firms are still adding to their payrolls, but hours worked are below pre-pandemic levels as firms cut back labor utilization. A concerning trend is the increasing flow of individuals dropping out of the job market altogether. For now, the labor market is holding, giving the Fed opportunity to stay focused on price stability."
Jamie Cox, managing partner at Harris Financial:
"These data are misleading and should be disregarded -- there is zero chance leisure and hospitality posts a negative print in the midst of the World Cup. Revisions higher in the next few months are coming."
Michael Feroli, chief U.S. economist at JPMorgan:
"The June jobs report wasn’t quite as peppy as the prior three reports, but it still points to overall general health in the labor market.
For the Fed, today’s report should allay any concerns that a re-acceleration in the labor market is a source of upside inflation risks. This should allow the center of the FOMC to continue to make the case to look through some of the upside surprises in core PCE inflation experienced earlier in the year."
"Combining (the nonfarm payrolls and unemployment rate) with other data in the report -- including a dip in labor force participation to 61.5% and 3.5% earnings growth -- suggests that the supply-side of the labor force was the primary driver for the miss in job creation. As to implications for Fed policy, this should dampen market expectations for a rate hike this year -- a scenario I have argued was a misreading of the Fed’s likely stance."
Diane Swonk, chief economist at KPMG U.S.:
"June job gains slowed but did not collapse and unemployment edged lower for the wrong reason. That doesn’t do much to reassure new grads but job gains are still well above last year -- the threshold is low and wages have gotten sticky. Those gains are reinforcing the floor under service inflation, which will further agitate hawks at the Fed. Financial market hopes that the Fed will not hike in response to the report are misplaced -- we still expect two hikes by year end. July was not an active meeting for a rate hike in our forecast."
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