Blistering June jobs growth and rising wages give investors a case of the Fed sweats

It’s hot in here… but don’t blame the summer swelter. Last month the US labor market appears to have gone from 75 and sunny to 95 and boiling. Yesterday ADP reported that private-sector companies added nearly 500K jobs in June — more than double what was expected, and the most in over a year. It’s a big ramp-up from May’s 267K gain.

• Planes, trains, and restaurant chains: The leisure and hospitality industry led the charge, accounting for 232K of new hires.

• Fed up: Despite the Fed’s aggressive rate hikes to quell inflation and cool the hot jobs market, there are still nearly two open roles for each available worker.

• Fell Dow: Yesterday the Dow and S&P 500 had their worst day since May as investors feared that “good” labor news could mean more rate-hike woes.

• FYI: Today we’ll get the full jobs report from the Labor Department (which doesn't always match the ADP's #s).

Direct-deposit feeling… While the pace of wage growth cooled, annual pay jumped 6.4% from a year ago, and for people who switched jobs, the median bump was over 11%. For a chunk of the pandemic, wages weren’t keeping up with rising prices. Recently, though, paychecks were back to growing faster than inflation. That’s good for workers but not great for companies’ bottom lines. In the first quarter, labor costs per unit of sales jumped 6% — more than prices — while profits per unit of output were up a measly 1.6%.