The US economy added just 57,000 jobs in June, roughly half of the 115,000 economists had forecast. The unemployment rate edged down to 4.2% from 4.3%, but this decline was partly due to a 0.3 percentage point drop in labor force participation to 61.5%, meaning fewer people were actively looking for work. Following the report, the probability of a Federal Reserve rate hike in July fell below 20%, and 2-year Treasury yields declined as investors recalibrated their expectations. The next Employment Situation report, scheduled for August 7, will be critical in determining whether June’s weakness was an outlier or the beginning of a sustained labor market deceleration.
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