The US economy added more jobs than expected last month while revisions subtracted 111,000 from the prior two months’ headline readings, government data released into a post-holiday lull showed.

At 206,000, the headline NFP print came in comfortably ahead of the 190,000 consensus. In case that might’ve been “too hot,” the outsized revisions took the edge off. And then some.

April’s headline was revised down by 57,000 and now stands as the weakest read on US job creation since the economy shed jobs in December of 2020.

Incorporating June’s headline and the lower readings for April and May, the three-month average is now 177,000, the lowest since January of 2021.

The composition of June’s additions left something to be desired. Gains were concentrated entirely in health care, government, social assistance and construction. And who wants that, right? We need more bartenders, shoe salesmen and baristas, not more nurses, bureaucrats, social workers and home builders. I don’t know about anybody else, but I’ll gladly start my own IV, happily wait on hold with the IRS business tax line for 14 hours and build my own house before I’ll make my own old fashioned or try on my own shoes or make my own coffee.

I jest. Sort of. I mean look, I’ve never been especially enamored with analysis that downplays job additions in sectors where workers deliver services that people actually need, even if the US economy’s built around the provision of services that people don’t.

In any event, average hourly earnings rose 0.3% MoM. Ideally, that’d be a little slower, but at this point, with CPI and PCE prices evidencing an inclination to recede, I’m not sure anyone’s going to fret about these AHE prints unless they pick up dramatically. YoY, June’s AHE reading was 3.9%, the slowest in years.

The unemployment rate rose to 4.1%, the highest since November of 2021. More importantly, perhaps, we’re now 0.7ppt above the cycle low. That’s a recession harbinger. Or could be, anyway. Consensus expected an unchanged 4% from the UNR print. The participation rate ticked up, but only by a tenth. Expect to hear Claudia Sahm’s name bandied about.

The household survey rebounded from May’s epic decline to show a 116,000 gain. The two series remain disconnected, as illustrated below.

There’s an explanation for that disconnect. I talked a bit about it here. According to economists, the gap can be explained by volatility and measurement error in the 16-24 year-old labor cohort and the household survey’s inability to capture the surge in immigration.

All in all, I don’t see much in this release to change the overarching narrative. Headed in, the NFP headline stood out as something of an anomaly in that persistent strength on the marquee measure of US job creation seemed to belie a deceleration telegraphed by other key macro metrics. The revisions included in Friday’s release helped to bring the NFP trend in line with the gradual slowdown narrative, good news for a Fed trying to run the “last mile” of a marathon to restore price stability.

The recession crowd will argue (not implausibly) that by the time the NFP headline rolls over in earnest, it’ll be far too late for the Fed to preempt a recession.

I’d expect markets to take Friday’s update in stride. There wasn’t anything especially alarming about it either way. For the purposes of the July FOMC meeting, it probably decreases the already low odds of a cut. At the same time, it doesn’t make the case for holding terminal any longer than officials were planning to anyway.