- U.S. employers added 209,000 jobs in June
- The ISM Services index rose to 53.9% in June
- The current federal-funds target range is 5.00% - 5.25%
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Top Three Market Headlines
Slower Pace for Monthly Jobs: The Labor Department reported last week that employers added 209,000 jobs in June, the lowest monthly tally since December 2020. Moreover, the total number of job additions previously reported over April and May was revised downward by 110,000. In June, job gains were seen in construction, healthcare, and government, whereas retailers reported cutting payroll. The unemployment rate for June fell to 3.6%, down 0.1 percentage point from the prior month, while hourly wages rose 4.4% over the prior year, a slightly faster pace than the 4.3% reported for May.
U.S. Services Sector Activity Picks Up: The Institute for Supply Management (ISM) reported last week that the ISM Services index, based on surveys of business executives, increased to 53.9% in June from 50.3% in May. (A reading above 50% indicates expansion of activity, while a sub-50% reading indicates contraction.) Notably, the Prices sub-component of the index registered 54.1%, its lowest level since March 2020, indicating that prices paid by services businesses are still increasing but at a much lesser pace. On the other hand, the ISM Manufacturing Index dropped to 46.0% in June from 46.9% in May, and has now indicated contraction in the manufacturing sector for eight straight months.
Fed Minutes Suggest Additional Rate Hikes: The Federal Reserve's release last week of the minutes of its June meeting revealed that a majority of Fed officials endorsed the decision to pause interest rate hikes. During the meeting, the central bank's rate-setting committee agreed to maintain the existing federal-funds rate target range of 5.00% to 5.25%, marking the end of a 10-meeting streak of rate increases. At the same time, the minutes noted that almost all officials judged that additional increases in the policy interest rate during 2023 would be appropriate, given that inflation remains above the Fed's 2% goal.