Traders Brace for Slower Job Growth as June Payrolls Data Looms

Will the June Jobs Report Confirm Labor Market Cooling?

The U.S. labor market is under the microscope as traders await June’s Non-Farm Payrolls report, released early due to the Independence Day holiday.

Economists expect a sharp slowdown, forecasting 110,000–115,000 jobs added, down from May’s 139,000 gain. The unemployment rate is projected to rise to 4.3%, the highest since October 2021, as hiring caution spreads across sectors.

ADP Surprise Raises Red Flags for Job Growth

ADP’s report shocked markets with a 33,000 job loss in June, the first negative reading since March 2023, well below forecasts of 100,000–115,000 gains.

ADP’s Chief Economist, Nela Richardson, highlighted rare but growing hesitancy to replace workers, hinting at deeper caution from employers.

While Morgan Stanley’s Michael Gapen noted that labor demand is slowing only modestly so far, ADP’s drop signals a potential pivot traders should monitor closely.

Federal Reserve Eyes Tariff Uncertainty and Wage Cooling

Tariff uncertainty under President Trump’s policies is weighing on business confidence, leading to delayed hiring decisions. Federal Reserve officials warn that persistent tariff increases could fuel inflation while elevating unemployment.

Average hourly earnings are expected to rise 0.3% for the month and 3.8% year-over-year, reflecting moderating wage pressures that may ease inflation concerns for the Fed while reinforcing caution in new hiring.

Sector Performance: Healthcare Steady, Manufacturing Weak

Healthcare remains a bright spot, adding over 50,000 positions monthly, but even this sector shows signs of moderation.

Professional and business services face notable weakness, while manufacturing employment has dropped by 90,000 over the past year, adding to the cautious tone across the labor market.

Glassdoor’s Daniel Zhao captured the tension, noting that while the job market remains strong on the surface, economic pressures could soon test its resilience.

Market Forecast: Cautious Outlook Ahead of Federal Reserve Decisions

Today’s report will determine whether the labor market can sustain its resilience or confirm deeper cooling that may delay Federal Reserve rate cuts.

Pantheon Macroeconomics expects the Fed to hold rates steady in July, with September emerging as a possible pivot depending on labor market resilience.

For traders, a softer report could strengthen bonds while putting the dollar under pressure, while a stronger print would challenge easing bets.

Overall, labor market signals now lean bearish, with traders preparing for slower job growth to guide policy and asset positioning into the coming weeks.

More Information in our Economic Calendar.