June payrolls miss badly; unemployment rate 4.2 percent

The Labor Department's June employment report, released a day early to accommodate the holiday, came in well below Wall Street expectations. Nonfarm payrolls rose by a seasonally adjusted 57,000, CNBC reported — "slower than the downwardly revised 129,000 added in May and worse than the 115,000 Dow Jones consensus forecast." Reuters said the May figure had originally been reported as 172,000 before Thursday's revision.

The unemployment rate fell to 4.2 percent from 4.3 percent, but for a reason that will worry economists. CNBC reported the move "was largely due to a slump in the labor force participation rate, which dropped 0.3 percentage point to 61.5 percent." Consumers dropping out of the workforce, in other words, did as much to move the unemployment rate as job creation did.

The macro implications for households cut both ways. Reuters reported that going into the report, financial markets saw "a roughly 50.7 percent chance" that the Federal Reserve would raise rates at its September 15-16 meeting, and that the Fed had left its benchmark rate in the 3.50 percent to 3.75 percent range last month while signaling more hikes this year. A soft jobs number complicates that path.

The New York Times' live coverage framed the print as a "status check on a stabilizing job market" — stable, but noticeably slower. Reuters' morning bid noted that ADP's private-sector print on Wednesday came in at 98,000, "a slight miss," but "not enough to shift any Federal Reserve expectations."

The June CPI release on July 14 will be the next big data point, Reuters said, citing Julien Lafargue at Barclays Private Bank: "As a result, markets are likely to place greater weight on the June CPI (consumer price index) report due on July 14, as inflation data will offer a cleaner read on the economy."