United States: Labor stability tempers Fed hike risks – TD Securities

TD Securities’ macro team led by Oscar Munoz expects headline US Nonfarm Payrolls to slow to 80k in June, with 55k private and 25k government jobs, marking a return to breakeven job growth. The Unemployment Rate is forecast to edge down to 4.2% as participation slips. The analysts see continued labor market stabilization allowing the Federal Reserve to stay on hold, with hikes only triggered by clear acceleration.

Jobs cool but remain resilient

"We expect headline NFP moderated in June to 80k after four of the first five months of 2026 showed much stronger than expected job gains. We look for 55k private gains and 25k government."

"Our forecast would reflect job gains returning to their breakeven pace — still showing stabilization, but pushing back against concerns of acceleration. Strength this year in job gains has started to come from outside the healthcare sector — with trade, transportation, & utilities and leisure & hospitality as significant drivers. We look for continued weakness in trade jobs, along with a moderation in, but still strong, leisure job gains for June."

"We also look for the UE rate to decline to 4.2% in June — with not all positive details. The participation rate is likely to resume declining on an unrounded basis, which factors into our forecast for a decline. Seasonal factors could also weigh on the level of unemployment."

"Risks to our forecast for June are mixed. Payrolls could again surprise to the upside, in line with the increased momentum in hiring to start the year. However, unusually positive seasonal factors for leisure and hospitality jobs could reverse more than expected, weighing on headline job gains."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)