Accelerated US labor market data. Important report before long weekend

Not on Friday, but on Thursday, the US Bureau of Statistics Labor released a monthly report on the employment situation in US economy. More new jobs and a drop in unemployment surprised economists. The Fed is closely watching the new data, which at the end July will decide on interest rates.

June data from the government's Bureau of Labor Statistics (BLS) on the number of jobs in non-farm payrolls showed their increase by 147 thousand. This result is better than the market consensus of 110 thousand and indicating an increase compared to the result from May. The data exceptionally were published on Thursday, not the first Friday of the month due to Independence Day celebrated on July 4th in the USA.

This is the last important report from the US economy this week, although before we go on a long weekend, some data will come to the market, including on services PMI, ISM, May foreign trade balance, published at the same time as BLS data, and manufacturing orders. However, the labor market is mandated Fed (along with the level of inflation), hence the special importance of American "payrolls".

A month ago, numerous things drew attention revisions for the previous months, which together reduced as many as 95 thousand positions. Now BLS reported another change to its previous results, but this time it was up. The increase in the number of jobs in May was not 139 thousand but 144 thousand. In turn, in April, which initially reported an increase in employment of 177 thousand, revision a month ago to 147 thousand, according to the latest data, the increase was 158 thousand In total, in April and May, the corrections showed 16 thousand more positions than before reported.

It is worth noting that some analysts predicted the result even below 100 thousand positions. UBS indicated exactly 100 thousand, but Goldman Sachs estimated only 85,000, pointing to the possible impact of immigration policy on the labor market. The impact of employee layoffs has been rather modest so far federal, which Elon Musk has undertaken, to end of May, heading the Department for Government Performance.

The result of his actions was the release of only 10 thousand jobs. government in February, 4 thousand in March, another 8.5 thousand in April and the most so far in May when the federal administration has been reduced by 15.8 thousand positions. According to the latest data, 8.1 thousand paid positions were lost in June by the American taxpayer. In turn, local authorities added 33 thousand in June. positions, and state governments 47 thousand, so the balance in the public sector for the previous month is positive.

The situation with jobs in the private sector was interesting, where their number increased by 74 thousand, compared to 137 thousand (revision from 140 thousand) a month earlier. Analysts had expected an increase of 105 thousand positions. Before the weaker reading in private sector, however, warned the ADP report published on Wednesday. Prepared by Automatic Data Processing based on salary data showed the first decline since March 2023, while market forecasts assumed an increase by approximately 95–99 thousand positions.

It seems that the situation on the labor market has not changed that much a big cooling as analysts feared, pointing out that the war Trump's trade policy has a negative impact on the entire economy. The latest revision of data on GDP growth in the USA for the first quarter of 2025 (the so-called third estimate) showed that Real GDP fell by 0.5 percent on an annualized basis. Earlier estimates They said it dropped by 0.3 percent (first reading) and 0.2 percent (second reading).

Over the last decade, negative GDP dynamics occurred only three times: in the first two quarters of 2020, when the pandemic COVID-19 has brought the global economy to a halt, including a record 28% drop in GDP. in the second quarter, as well as in the first quarter of 2022, when the Reserve The federal government started cycle of interest rate hikes.

It is hard to talk about cooling down when the unemployment rate is falling, which amounted to 4.1 percent compared to 4.2 percent in the readings from March, April and May. Translates This amounts to 7.015 million unemployed people, i.e. those actively looking for a job (and ready to take it) Americans. Economists expected a reading of 4.3 percent

In absolute numbers, there was a decrease in the number of unemployed people by 222 thousand, with the number of employed persons increasing by 93 thousand and the population increasing 329 thousand economically inactive. These are the results of an independent survey (BAEL), which is used by the BLS to estimate the scale of unemployment.

The average hourly rate in June 2025 was USD 36.3 and was only 0.2 percent higher than a month earlier and 3.7 percent higher than a year ago. The market consensus assumed an increase of 0.3 percent month-on-month and 3.9 percent y/y. The average working time dropped to 34.2 hours per week from 34.3 previously.

Federal Reserve's next interest rate decision will take place on July 30. At the forum of the European Central Bank which ended this week (ECB) on central banking, which took place in Sintra, Portugal, Fed Chairman Jerome Powell said: "I can't say whether July is too late early for an interest rate cut, it will depend on the data."

In addition to the CPI inflation report, which will be published July 15, labor market data covers the Fed's mandate area he two main goals of maximum (full) employment and price stability, i.e. keeping inflation low and stable.

Hence, the markets are focusing so much attention on Thursday's report. This creates a domino effect: a stronger or the weaker employment situation in the US may change expectations regarding Federal Reserve policy, which then affects other central banks and currency markets.

"What does the market say about this? A spontaneous reaction: a stronger dollar and higher rates. The reason? Concerns after the weak ADP did not come true. The labor market remains in good shape. What does the Fed say about this? The central bank can calmly wait for September, when we expect a rate cut," commented mBank analysts.

Futures on US indices gained after the publication of the BLS report. The dollar strengthened, gaining around 0.5% against the euro, and the EUR/USD exchange rate fell below 1.175. The yield on 10-year US federal government bonds jumped up by as much as 10 basis points and at times exceeded 4.36%. In Europe, stock indices slightly increased the scale of increases observed since the morning. The data surprised positively, which translates into lower concerns about the US economic condition.

Source: