June Jobs Report Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s reaction to this morning’s U.S. Bureau of Labor Statistics report on employment conditions in June.

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“Job growth came in at 147,000 in June, in line with the average pace for the last 12 months. However, half of these job gains were in state and local government, leaving private sector job gains at 74,000, at half their pace of recent months. Looking within the private sector, effectively all these new jobs were in education, health care, and hospitality. Recent data also show that job openings are up in these sectors.

“The unemployment rate dropped back to 4.1%, but this was the result of more individuals leaving the labor force rather than gaining employment, as the labor force participation rate dropped again.

“Wage growth slowed again in June to a 3.7% rate over the last 12 months. 

“Taken together, these data indicate a job market that is holding up reasonably well given the uncertainties facing this economy. While there are certainly some signs of softening in the private sector, the report is likely to keep the Federal Reserve on hold for now. MBA is still forecasting two cuts from the Fed this year.

“Potential homebuyers are likely to remain cautious unless, and until, the job market begins to improve again, or mortgage rates drop sufficiently to spur more activity.”