The U.S. added 222,000 jobs during June, which handily beat economist expectations and was an improvement from the 152,000 jobs that were added in May. The unemployment rate (UE) rose by a 1/10th of a percent to 4.4%, but remains low by historical standards. The increase in the UE rate was due to more labor force participants, which is a “good” reason as it indicates more people are actively looking for work. Absent any other details, these numbers point to a very healthy job market with little in the way of slack. There is one statistic, however, which continues to shine a negative light on the labor market—the lack of substantial wage growth. Average hourly earnings for June came in at 2.5% year over year, below economist estimates and just 0.2% above May’s level. In past periods of strong employment, average y/y hourly earnings growth has been in the 3-4% range. The correlation breakdown between a low unemployment rate and strong wage gains has been puzzling economists and may be contributing to the lack of overall inflationary pressure in the economy. Despite this economic conundrum, the Federal Reserve appears to be pushing ahead with their plans to let their balance sheet shrink. Minutes from their June policy meeting were released last week and strongly hinted that the wind-down will begin in September. Moving forward, the number of jobs being created appears to have the most bearing on Fed policy, but inflation, or lack thereof, can’t be too far from Fed official’s minds.