Core Viewpoint - The resilience of the labor market is highlighted by the June non-farm payrolls data, which showed an increase of 147,000 jobs, surpassing market expectations of 110,000 jobs, and a decrease in the unemployment rate from 4.2% to 4.1% [1][5] Employment Data Summary - In June, the private sector saw job growth primarily in healthcare and social assistance (+59,000), leisure and hospitality (+20,000), construction (+15,000), and transportation and warehousing (+8,000), while high-skill sectors like business services saw a decrease of 7,000 jobs [2][3] - The ADP report indicated a reduction of 33,000 jobs in the private sector, mainly in high-skill industries, while low-skill sectors like manufacturing and construction experienced job increases [3][4] Structural Labor Market Issues - The labor market is facing a structural mismatch, with government layoffs and advancements in artificial intelligence reducing demand for administrative and high-skill workers, while tightened immigration policies are leading to a shortage of low-skill labor [4][5] - The influx of new immigrants has sharply decreased this year, contributing to a significant reduction in labor supply, which has lowered the "breakeven employment number" needed to keep the unemployment rate stable [4][5] Federal Reserve Outlook - The strong June non-farm payroll data diminishes the likelihood of an interest rate cut in July, with the next potential cut expected in the fourth quarter, contingent on inflation trends [5] - The Federal Reserve is adopting a "wait-and-see" approach, focusing on inflation risks rather than immediate rate cuts, as the labor market remains resilient [5]