June Jobs Report Expected to Show Weakening Growth

Economists anticipate the June jobs report will show a moderating labor market, with nonfarm payrolls forecast to slow to 115,000 from 139,000 in May and the unemployment rate rising to 4.3%. While BlackRock views this as a moderate slowdown not yet cause for alarm, the outlook is heavily influenced by policy uncertainties, specifically the impact of tariffs and the removal of Temporary Protected Status. This backdrop is expected to keep the Federal Reserve on hold regarding interest rate cuts, partly due to inflation concerns stemming from tariff uncertainty.

Analysis

Consensus forecasts for the June jobs report point to a continued, moderate deceleration in the US labor market, with nonfarm payrolls expected to slow to 115,000 from 139,000 in May and the unemployment rate projected to rise to 4.3%. While BlackRock characterizes this as a slowdown that is not yet cause for alarm, the outlook is clouded by significant policy uncertainty. Economists at Goldman Sachs and UBS are forecasting even weaker job growth of 85,000 and 100,000 respectively, citing the impact of the removal of Temporary Protected Status (TPS) for migrant workers as a direct headwind. Furthermore, the looming July 9 expiration of the tariff pause is creating tangible economic damage through uncertainty alone, with a recent Kansas City Fed survey showing 21% of manufacturers have already cut their workforce and 25% have reduced job postings. This complex backdrop is expected to keep the Federal Reserve on hold, as futures markets indicate an 80% probability of no rate cut in July. The central bank appears to be balancing the slowing labor market against concerns that tariff pass-through could trigger an inflationary shock, a key variable holding back monetary easing.

Key Decisions for Investors

• Investors should prepare for a potentially weaker-than-expected jobs report, given that influential forecasts from Goldman Sachs (85,000) and UBS (100,000) are significantly below the 115,000 consensus, creating downside risk for equities.
• Monitor policy developments around the July 9 tariff deadline with extreme vigilance, as survey data confirms that business uncertainty is already actively suppressing hiring and investment, making this a primary driver of forward-looking economic activity.
• Do not price in imminent Federal Reserve rate cuts, as the central bank is caught between slowing growth and the unresolved threat of tariff-induced inflation, suggesting a more prolonged period on the sidelines than markets may have previously anticipated.