Aberdeen: The US labour market remains healthy
Jon Butcher, Senior US Economist at Aberdeen, comments on the US labour market figures released this afternoon:
'Following this latest release and downward revisions, the 3-month average for payrolls is 111k, a significant slowdown from the 188k 3-month average we were looking at following the May release.
This slower pace of growth following the revisions still points to a healthy labour market, with jobs being added faster than the labour force is growing. However, it also indicates a labour market that looks less likely to overheat, reducing some of the pressure on the Federal Reserve to increase interest rates in the coming months.
The broader set of labour market data offered a mixed picture. The headline unemployment rate eased from 4.3% in May to 4.2%, but this mainly reflected a drop in the labour force participation rate.
Wage growth increased marginally from 3.4% to 3.5%, having been on a downward if volatile trend since late 2023. But the rate of wage growth is still below what the Fed would consider inflationary.
Overall, the latest employment report indicates a labour market that is stable and showing signs of gradual improvement, but not one accelerating rapidly in a way that will add to inflationary pressures. As such, we expect this latest data will reduce the likelihood of a Fed rate hike in the end-July meeting.'