June’s Goldilocks Payrolls May Allow Fed to Cut Rates in H2

Trusted Insights for What’s Ahead^®

• The labor market remains on solid footing despite the negative impacts of tariffs and uncertainty on economic growth.
• Payrolls rose by 147,000 in June, while the unemployment rate declined to 4.1%, signaling continued resilience in labor demand.
• Layoffs appear to remain low, even as demand for new hires continues to be somewhat lukewarm amid slowing growth. The removal of uncertainty surrounding the fiscal policy outlook and tariffs may allow this equilibrium to last into H2. Difficulties finding a job for those unemployed, reflected in rising levels of continuing jobless claims, remains a downside risk.
• The headline payrolls reading indicated the labor market remains solid. However, the details revealed that underlying growth is slightly moderating from prior years. Indeed, the jobs gain was concentrated in a relatively narrow range of industries. A large, unexpected increase in g