On the June Jobs Report

147,000 net payrolls was a big beat versus the consensus. But more than all the beat, and half the jobs growth, was due to state and local government hiring. Private payroll growth at 74,000 was a big miss. But it’s spot-on the new-normal dial-tone for net jobs growth with immigration having effectively ceased, indeed running in reverse now for three months. It is not a recessionary number, and it comes as a relief after yesterday's ADP print showing private payroll contraction. Expectations for a July rate cut have vanished, but we still don’t rule one out. There’s nothing in today’s jobs report, including tepid average hourly earnings growth, to keep the Fed from reacting dovishly to what we are sure will be a very mild CPI print in two weeks.