US Economy Adds 372,000 Jobs In June, Another 0.75% Fed Rate Hike 'Almost A Certainty'

The SPDR S&P 500 ETF Trust SPY traded lower by 0.8% Friday morning after the Labor Department reported encouraging U.S. jobs market numbers from June.

• The U.S. added 372,000 jobs in June, beating consensus economist estimates of 250,000 jobs.
• The U.S. unemployment rate remained steady at 3.6%.
• The labor participation rate was unchanged at 62.2% and remains below its 63.4% pre-pandemic rate in February 2020.
• Wages were up 5.1% from a year ago and by 0.3% from May.

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The Labor Department also revised April's total job growth lower by 68,000 jobs to +368,000 and May's job growth lower by 6,000 jobs to +390,000. The combined revisions totaled 74,000 fewer jobs.

The professional and business services industry led the job creation in June, adding 74,000 positions. Employment in the professional and business services industry is now up by 880,000 jobs since February 2020.

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Following the release, the bond market is pricing in a 97.7% chance the Federal Reserve will issue another 0.75% interest rate hike at its July meeting, up from 96.9% a day ago, according to CME Group. The chance of a 1% rate hike this month now stands at 2.3%, up from 0% just 24 hours ago.

Voices From The Street: Charlie Ripley, Senior Investment Strategist for Allianz Investment Management, said another 0.75% Fed rate hike in July is "almost a certainty at this point."

"Ultimately, what matters from here for investors is not how quickly the Fed hikes rates, but how high they have to go in order to slow the economy and more persisting data points like today puts a 4% terminal policy rate in the sights of the Fed," Ripley said.

John Lynch, Chief Investment Officer at Comerica Wealth Management, said employment data remains the only major economic indicator not suggesting an U.S. economic slowdown could be coming.

"Second quarter earnings calls should provide clarity on the degree to which weak business and consumer confidence surveys have weighed on personal spending and capital investment decisions," Lynch said.