Americans are growing more optimistic about the economy, as wage gains are finally outpacing inflation and unemployment remains low. Consumer sentiment is at its highest since 2021.

Price increases continue to run well above the Fed's target, but the latest numbers offer hope that the Fed will end rate hikes soon.

"The June jobs report was poised to be another blowout. Instead, it showed signs of the labor market cooling."

The unexpected surge in May, combined with growth in applications to build, adds to evidence that residential real estate is recovering after a yearlong slump.

The reports may bolster chances that the Federal Reserve will pause its run of interest-rate hikes, but inflationary pressures remain persistent.

CPI registers its first sub-5% reading in two years. Core inflation has also moderated, to 5.5%.

In February, housing costs helped deliver a larger-than-forecast 0.5% gain in so-called core inflation, which excludes food and energy

But employment is still too high for the Fed.