The US economy added 209,000 jobs in June, according to the government’s tally released on Friday.

The NFP headline was short of estimates and may come as something of a relief for markets given the hawkish policy implications of a scorching-hot read on private sector hiring released a day earlier.

The discrepancy between the two reports was difficult to ignore, although traders long ago gave up on the idea that ADP is a reliable indicator of the government figures in the pandemic era.

Consensus expected 230,000 from the NFP headline. The whisper number was 280,000 and the range, from more than six-dozen forecasters who ventured a guess, was 100,000 to 350,000. Among Wall Street banks, Deutsche Bank and JPMorgan were closest.

Notably, revisions subtracted 77,000 from April and 33,000 from May. The labor market now looks softer than it did. (Oh what a difference 24 hours makes). The number of people working part-time for economic reasons jumped the most since April of 2020.

At 149,000, private payrolls came in well below estimates (200,000). Manufacturing added 7,000 jobs and notably, leisure and hospitality hiring was just 21,000, among the smallest gains since the rebound from the pandemic purge.

Government added the most jobs with 60,000 new positions, followed by healthcare, social assistance and construction.

The household survey rebounded to show a 273,000 gain following May’s big drop. Once again, we’re reminded why it’s unwise to read anything into month-to-month oscillations in the series. The unemployment rate moved lower, to 3.6%. Participation was unchanged.

Unfortunately for the Fed, average hourly earnings overshot, printing 0.4% MoM against expectations for a 0.3% advance. The prior month was revised higher.

The YoY pace likewise topped estimates at 4.4%. That’s still nearly a full percentage point above levels seen as consistent with price stability as defined by policymakers.

Frankly, this wasn’t a great report for anyone. Although a moderation in the headline pace of job creation is welcome in the context of the “good news is bad news” trade that reasserted itself in the wake of the strong ADP report and ISM services beat, the combination of the downside headline miss, meaningful downward revisions to prior months, a lower unemployment rate (against the Fed’s “desire” to engineer an uptick in the service of normalizing the labor market), hotter-than-expected wage growth and flat participation isn’t the best conjuncture.

Perhaps markets will take solace in the cool headline and even in the revisions. Another month of that and the odds of a hike in September (or November if the Fed wants to go to an every-other-meeting cadence) would be greatly diminished. But Friday’s report, when considered as a whole, had stagflation vibes. And it shouldn’t reduce the odds of a hike at this month’s policy gathering.