The US employment report was again mixed. Continued rise in unemployment rate, benign wage growth and decline in ISM services/factory orders lifted Federal Reserve (Fed) rate cut expectations, UOB Group Senior Economist Alvin Liew notes.

The data lift Fed rate cut expectations

“The US employment report was again mixed, as job creation came in at 206,000 (Bloomberg est 190,000), while wage growth cooled exactly as forecast at 0.3% m/m, 3.9% y/y in Jun (May: 0.4% m/m, 4.1% y/y).”

“Job creation was less broad-based in Jun as bulk of new jobs were concentrated in sectors of health care, government and construction while jobs gains in leisure & hospitality eased. Manufacturing and professional services lost jobs.”

“Continued rise in unemployment rate, benign wage growth and decline in ISM services/factory orders together with the moderating trend and the narrowing base of job creation, lifted Fed rate cut expectations. We keep to our forecast of two 25 bps cuts in Sep and Dec as data still points to possibility of easing in 2H 2024.”