June non-farm data is expected to soften due to three key factors

The Bureau of Labor Statistics is scheduled to release non-farm payrolls data for June on July 3, 2025. The consensus forecast for job creation is 120,000, down from 139,000 in May. In addition, the unemployment rate is expected to rise slightly by 0.1 percentage point to 4.3%. This consensus outlook was agreed.

The expected softening of non-farm payrolls in June is due to three key factors:

The first is the continued decline in non-farm payrolls. Since March 2025, job growth has declined steadily from 228,000. Without a significant external catalyst, June's data is unlikely to exceed May's.

Second, high-frequency data on continued jobless claims show a continued increase since early June 2025. Applications increased from 1.904 million on June 5 to 1.974 million on June 26, increasing 70,000. This upward trend highlights continued weakness in the U.S. labor market, making the non-farm payrolls data highly likely to be subdued.

Third, the continued macroeconomic slowdown in the US has dampened companies' willingness to hire, and prolonged weakness in domestic demand has further constrained companies' ability to expand their workforce. These developments put additional downward pressure on the non-farm payrolls data for June.

Looking ahead, we expect continued weakness in the US labour market in the coming months, reinforcing the downward trajectory in non-farm payrolls. Weak labour market conditions will reduce household incomes and constrain private sector spending, a self-reinforcing cycle of labour consumption that will hamper US growth. While higher tariffs may push up import prices, weak domestic demand will limit inflationary pressures. In this low growth and low inflation environment, the Federal Reserve is likely to initiate a new rate-cutting cycle in the near future.

In the equity market, the combination of accommodative monetary policy and expansionary fiscal measures, such as tax cuts, is expected to mitigate the impact of the economic slowdown, supporting the medium-term bullish outlook for U.S. equities. Therefore, if the labor market weakens as expected, leading to a near-term market correction, this will provide investors with a strategic opportunity to prepare for future earnings.