Non-Farm Payrolls Shock: US June Jobs Rise by Only 57,000, Gold Breaks $4,130, Fed Rate Hike Expectations Cool

TradingKey - Affected by the US Independence Day holiday, the June non-farm payrolls report, originally scheduled for release on Friday, was brought forward to Thursday, and the results unexpectedly cooled down far beyond market expectations.

Data showed that US non-farm payrolls increased by only 57,000 in June, about half of the market expectation of 113,000, and also registered a significant decline from the sharply downwardly revised 129,000 in May.

At the same time, the non-farm payrolls data for April and May were revised down by a combined 74,000, further intensifying market concerns about a cooling labor market.

Although the unemployment rate unexpectedly fell from 4.3% to 4.2%, the lowest level since June 2025, this improvement stood in stark contrast to the sharp decline in job growth.

In terms of sector performance, the job market in June showed clear divergence. The leisure and hospitality sector saw its largest decline in employment since 2020, while retail trade and information industries also experienced layoffs, reflecting the impact of weak consumer demand on the service sector.

However, the healthcare and social assistance industries continued to maintain strong hiring momentum, serving as the main force supporting the job market.

Natixis economist Christopher Hodge said that although the June data fell significantly short of expectations, the labor market remains solid and shows no signs of overheating that would concern the Federal Reserve, representing a performance closer to pre-pandemic normal levels.

The market reacted swiftly, with gold surging past $4,130.

Following the release of the data, financial markets reacted swiftly. U.S. stock index futures surged, with Nasdaq futures rising 0.60% on the day, S&P 500 futures climbing 0.40%, and Dow futures gaining 0.39%, while spot gold prices soared to $4,130.

This reaction stood in stark contrast to the market's movement when May nonfarm payrolls beat expectations, at which time the robust data sparked fears of Federal Reserve interest rate hikes, triggering a sharp selloff in U.S. equities and a plunge in gold.

Market expectations for Federal Reserve rate hikes also shifted as a result.

Previously, according to the CME Group's FedWatch Tool, financial markets estimated about a 50.7% probability of the Fed raising rates at its September meeting. However, after the disappointing June nonfarm payrolls report, traders fully priced in a December rate hike, while the previously expected probability of an October hike fell significantly.

The disappointing nonfarm payrolls report not only impacted short-term market trends but also added uncertainty to the Federal Reserve's policy decisions. Ahead of the July meeting, Fed officials will closely monitor additional economic data to gauge the true health of the labor market and the trajectory of inflation.