The U.S. labor market took a breather in June. Employers added just 57,000 jobs, missing the 110,000 economists had penciled in and a sharp slowdown from May's 129,000. But before you panic, the unemployment rate actually ticked down to 4.2%, below the 4.3% consensus. So, mixed signals.

Wage growth was steady: average hourly earnings rose 0.3% on the month, matching expectations, and were up 3.5% from a year ago. That annual figure was exactly what economists predicted, up from 3.4% previously.

The revisions weren't pretty. April's payroll gain was cut to 148,000 from 179,000, and May's was slashed to 129,000 from 172,000. Combined, that's 74,000 fewer jobs than initially reported over those two months.

This is the first jobs report since the Fed's June 17 meeting, where Chair Kevin Warsh and his committee held rates at 3.50%-3.75% but turned notably hawkish. The median policymaker now expects rates to end 2026 higher than today, and nine of eighteen officials penciled in at least one hike. That's a stark reversal from March, when the median still pointed to a cut.

So, what does this mean? A cooling labor market might give the Fed cover to hold steady, but the hawkish projections suggest they're still worried about inflation. Stay tuned.