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Expand chart
Data: Bureau of Labor Statistics; Chart: Axios Visuals

The U.S. economy added 224,000 jobs in June — far more than the 165,000 economists were expecting, while the unemployment rate edged slightly higher to 3.7% and wages grew at an annualized pace of 3.1%, the Labor Department said on Friday.

Why it matters: This is a significant rebound from the weak jobs report in May, calming concerns that the labor market — the standout of the 10-year U.S. economic expansion — was losing momentum at a rapid pace. It may, however, complicate financial markets' expectations of a series of interest rate cuts by the Federal Reserve starting as soon as this month.

Details:

  • May's numbers were weaker than initially thought at 72,000 (from 75,000). So were April's, which were revised lower by 8,000 jobs.
  • Employment growth has averaged 172,000 per month so far this year — a slower pace than the average monthly gains of 223,000 last year.
  • One big bright spot: the manufacturing sector added 17,000 jobs in June after several months of cooling. But the industry has averaged 8,000 jobs per month — a sharp drop from the average 22,000 jobs gained per month last year.

What they're saying:

  • "[D]espite other weak areas in the US economy, job growth is still holding up, which should continue to bolster consumer confidence and spending," Patrick Chovanec, chief strategist at Silvercrest Asset Management, tweeted in part.

The backdrop: Stocks have soared to all-time highs on hopes that the Fed would step in with a rate cut in response to signs of weakening in the economy. Bond yields, which jumped in response to the jobs report, have dropped to multi-year lows in recent months on concerns that a recession could be imminent.

  • The strong report doesn't necessarily take a rate cut off the table at this month's Fed meeting — particularly since inflation has been so weak — but the numbers help make the case for cutting rates by 25 basis points instead of 50 basis points.
  • After the jobs report, traders eased bets that the Fed would 100% cut rates later this month.

Go deeper

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Illustration: Aïda Amer/Axios

Fear of never being able to pay off school loans is keeping many young Latinos in the U.S. from going to college or completing a degree, according to a report published in September.

State of play: Latinos tend to have more difficulty repaying school debt than white student borrowers, according to Federal Reserve data, at the same time that they need more loans in order to afford tuition.

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Scoop: Biden administration objects to Israeli settlements plan

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The Biden administration has privately protested to the Israeli government over its plan to approve the planning and construction of more than 3,000 new housing units in the Israeli settlements in the occupied West Bank, sources briefed on the issue tell me.

Why it matters: The approvals for new homes in the settlements will be the first since President Biden assumed office, and come after Biden and his top aides personally pressed Israeli Prime Minister Naftali Bennett to restrain settlement activity and decrease the number of new housing units.

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Pentagon warns of ISIS-K capabilities outside Afghanistan

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U.S. intelligence believes ISIS-K has the "intent" to eventually launch attacks outside of Afghanistan and could be capable of doing so "somewhere between six or 12 months," a top Pentagon official told senators Tuesday.

Why it matters: The U.S. withdrawal and subsequent Taliban takeover of Afghanistan has raised fears that terrorist groups will reconstitute and potentially pose a renewed threat to the U.S. homeland.