U.S. employers added 209,000 jobs in June, the lowest number since 2020, but still a sign that the Federal Reserve will continue on its rate tightening cycle this year and perhaps into early 2024.
While the additions build on the 339,000 positions created in May, which was the lowest since March, the data may still present a conundrum for policymakers who continue to wrestle with consumer inflation of 4%, twice the Fed's preferred level.
The unemployment rate held steady at 3.6%.
Ahead of the report, 92% of market participants anticipated a 25 basis point rate hike this month, according to the CME Group's FedWatch tool. That compares to just 7.6% of traders who expect the Fed to hold rates steady at the current range of 5% to 5.25%. Policymakers will meet on July 26.
The minutes from the last meeting, released earlier this week, showed nearly all Fed officials supported additional interest rate hikes amid signs of sticky core inflation.
Fed Chairman Jerome Powell, speaking at a conference in Madrid last week, echoed the same sentiment.
"We expect the moderate pace of interest rate decisions to continue," he said following the pause in tightening instituted in May.
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Carlyle Group co-founder David Rubenstein said in an interview on The Claman Countdown this week that Powell has been telegraphing the plan so as not to surprise the markets.
"The Fed didn't want to panic the markets, I think the Fed gave itself enough flexibility, so it could have another 50-basis-point increase this year without surprising people, so I think the markets are assuming a 25-basis-points increase in July," he said, adding another 25 could come in the fall.
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A separate report released Thursday showed that job openings dipped to 9.8 million at the end of May. While that marks a decline from the previous month, it remains abnormally high. Before the COVID-19 pandemic began in early 2020, the highest on record was 7.6 million. There are still roughly 1.6 jobs per unemployed American.
