3 July 2025
If you are covering the latest US employment statistics, please find below a comment from Lindsay James, investment strategist at Quilter:
“As has been a theme for some time now, the US economy continues to confound expectations, with the labour market adding 147,000 jobs in June, well above consensus expectations and recent averages. Furthermore, the unemployment rate fell to 4.1%, suggesting that the US economy remains in robust shape. Nervousness has begun to creep into the US jobs market, following ADP’s recent report of private payrolls showing the first contraction in jobs in over two years. With the end of the 90-day pause in reciprocal tariffs ending next week, it was thought that the slowdown was under way.
“However, for now this seems to be far from the case. These job numbers will get far more attention than usual too because investors are watching for any sign that the labour market is beginning to weaken sufficiently to trigger an interest rate cut in July. Despite negative GDP growth in the first quarter and data suggesting the US is beginning to experience the pricing impacts of the tariff policy, this is yet to feed into the wider economy and the jobs market continues to grind away.
“Ultimately, this gives Jerome Powell and the Federal Reserve the cover it will want to hold rates at the next meeting. Prior to this data, the market had a 25% chance that the Fed would cut rates in July given some of the more supportive comments from members in recent days – this now just stands at a close to 5% chance. Indeed, Donald Trump is getting more vocal, and indeed vociferous, in his criticism of the Fed and its interest rate policy, perhaps looking to influence the next meeting and take credit. For now, though, Jerome Powell has been non-committal, resisting the constant pressure from the White House. With the jobs report continuing to indicate things are okay, and potentially even better than hoped for, in the US economy, he will feel vindicated with his policy.
“Trouble has yet to hit US employment, and as such the Q1 GDP figure is likely to be consigned to being a blip. Uncertainty remains ever present due to the unknowns surrounding tariffs, but for now the Fed can keep calm and carry on with its plan.”
