The Roth Report: What We Know About the Labor Market (and What We Don't)

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The Roth Report: What We Know About the Labor Market (and What We Don't)

July 5, 2026

What We Know About the Labor Market (and What We Don't)

The June employment report answered more questions than it created. Several of the biggest tensions in the labor

market data eased, while a handful of important measurement questions remain. Today, we separate what we think

the report clarified from what it still leaves uncertain.

At first glance, Thursday's payroll report appeared to send conflicting signals: payroll growth slowed more than

expected, while the unemployment rate unexpectedly declined. But taken together, the details tell a much more coherent

story. Payroll growth, unemployment, and wage growth are now in much better alignment, reinforcing the view that

the labor market remains broadly in balance. The bigger uncertainties now lie less in the economy itself than in how

we are measuring it.

What We Know

1. The labor market appears increasingly in balance.

The June payroll report helped resolve one of the biggest inconsistencies in the labor market data. Payroll growth had

been running well above our estimate of breakeven, yet the unemployment rate remained broadly stable and there were

few signs of labor market tightening. The weaker June payroll print, together with downward revisions, brought those

signals back into better alignment.

The three-month average now stands at 111k, a pace that looks much more sustainable to us. It also helps explain why

the unemployment rate has remained broadly steady this year (excluding June's likely participation-related noise) and

why wage growth has remained moderate.

3-Month Average Payroll Growth vs. Breakeven

200 Rate (Thous)

-50

'24 '25 '26

3mo average Breakeven Est

Source: Wolfe Research, Haver Analytics, as of Jun 30, 2026