June Jobs Report Show 372,000 New Hires, Defying Recession Fears: Rate Hike Bets Accelerate

The U.S. economy added much more-than-expected new jobs in June, the Labor Department said Friday, cementing the case for Fed rate hikes and challenging threats of a near-term recession.

Updated at 8:55 am EST

The U.S. economy added more than 370,000 new jobs last month,  the Labor Department said Friday, a tally that smashed Wall Street forecasts and likely cements the case for sharper Federal Reserve rate hikes over the coming months.

The Bureau for Labor Statistics said 372,000 new jobs were created in June, with headline unemployment rate holding at a post-pandemic low of 3.6% for the fourth consecutive month.  

The June tally was around 100,000 ahead of the Street consensus forecast of 268,000. The BLS also revised its May jobs addition tally lower by 6,000 to 384,000 from its original estimate of 390,000. April totals were revised lower, as well, to 368,000. Hiring was powered by the sectors, the BLS said. Employment in leisure and hospitality, as well as healthcare, was also firmly higher, the BLS said.

Average hourly earnings rose 5.1% from last year, and 0.3% on the month, to $32.08, while the number of hours worked held at 34.5. 

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Labor Department data earlier this week showed that weekly jobless claims rose by 4,000 from the prior period to 235,000 with announced job cuts rising by 57% to just over 32,500 positions, the highest in sixteen months.

That contrasts sharply with data from the BLS’s monthly Job Opening and Labor Turnover (Jolts) report, known as Jolts, which showed 11.3 million unfilled positions in the job market over the month of May. 

U.S. equity futures extended earlier declines following the data release, with contracts tied to the Dow Jones Industrial Average indicating a 140 point opening bell dip and those linked to the S&P 500 priced for a 27 point move to the downside.

Benchmark 10-year Treasury note yields bumped higher, to 3.07% while 2-year notes were pegged at 3.138%. The dollar index, which hit a fresh 20-year high early in the session, was 0.16% higher at 107.303.

The CME Group’s FedWatch tool suggests a 94% chance of a 75 basis point rate hike later this month from the Fed following the jobs data, with an 80% chance of a follow-on move of 50 basis points in September. 

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