US DATA: Unemployment Rate Technically At Recent High But Largely Rangebound

On the household survey side of the payrolls report, the unrounded unemployment rate bounced from a surprise decline to poke to a new cycle high in July at 4.248%. An abrupt slowdown in labor supply is helping keep this rate from breaking more materially out of the recent range however, with the rate still for now quite comfortably below the 4.5% the median FOMC participant forecast for 4Q25. 

• As posted shortly after the release, the unrounded unemployment rate came in on the high side in July at 4.248% (cons 4.2 with a few looking for 4.1).
• It lifts from the surprisingly low 4.117% in June to poke above the 4.244% in May for technically a new cycle high.
• More broadly though, it roughly keeps to a 4-4.25% range seen since last summer. Recall that last July saw a surprise lift to 4.25% which was then revised down to 4.22% in annual revisions.
• It will need a sharper deterioration in the u/e rate in the final six months of the year to reach the FOMC's June Q4 median projection of 4.5% than what is currently implied in the past few months of the household survey. The fear of course is if the much weaker than expected trend in payrolls after today’s release continues and outpaces the decline in labor supply ahead.
• The drivers behind latest moves: the number of unemployed increased 221k in July after -222k in June whilst employment fell 260k after a tepid 93k increase in June.
• That nets out at a -38k decline in the labor force, unusually a third consecutive monthly decline after -130k in June and a heavy -625k in May after jumping 544k in April.