Employers added 372,000 jobs in June, continuing a string of strong job gains that fueled the US economic recovery.
The jobless rate remained unchanged at 3.6 percent, where it has been steady since March, according to the Labor Department’s monthly report released on Friday. The rate is only slightly above its pre-pandemic level, which was at a 50-year low.
“Today’s report just reiterates that the job market is a bright spot in the recovery,” said Daniel Zhao, senior economist at careers site Glassdoor. “Though we’ve heard recession fears and other concerns, the job market continues to move forward.”
Despite the strong recovery in the labor market, recession fears have risen as the Federal Reserve aggressively hikes interest rates to dampen consumer demand and lower high inflation. The concern is that companies will respond to higher borrowing costs by cutting production and laying off workers, which could push the economy into recession.
Although the June numbers came in higher than forecasters had expected, there are signs that hiring may be cooling. Job gains slowed in June from levels earlier in the year (the economy averaged about 470,000 jobs per month from January to May). Job vacancies rose to 11.3 million for the second straight month in May, according to a Labor Department report released on Wednesday, although that number is still well above pre-pandemic levels.
“There may be signs that the labor market is slowing down slightly,” Zhao said. “But it’s still going at a good pace.”
Job gains were revised up slightly in April and May, adding 74,000 fewer jobs than previously. June payrolls could still be revised up or down in the coming months, but many economists took this as a sign the recession was far from over.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note: “Overall, the employment data supports our view that the economy is still in recession hypothetically, while wage numbers ease inflationary pressures.” Huh.” Release of the report.
Wages continued to rise in June, although growth has slowed in recent months. Average hourly earnings rose 5.1 percent year-on-year in June, up from 5.2 percent in the year to May. Average wage growth has not kept pace with the fast pace of inflation, but a slowdown in growth could be reassuring for Fed officials, who are watching closely for signs that rapid wage growth is driving inflation.
Strong job gains could increase pressure on the Fed to continue its aggressive rate hikes. Central bank officials have said they stand ready to raise interest rates by 0.5 or 0.75 percentage points at the next Fed meeting later this month. This would follow the last rate hike in June, when the central bank hiked rates by 0.75 percent, the largest hike since 1994.
The attitude slowdown might not be as bad as it looks
A slowdown in hiring may seem like an ominous sign, especially as recession fears mount. However, some economists say a gradual slowdown in the labor market might not be a bad scenario. And because job gains have been strong for months, the country has fewer shortages than, say, a year ago, when the economy was down to 6.8 million jobs from pre-pandemic levels.
Some economists say that job growth falling at a more sustained pace could bode well for the Fed as it tries to rebalance supply and demand. Central bank officials expect a “soft landing” where inflation eases and unemployment does not rise quickly. There are currently about two job opportunities for every unemployed person, meaning many companies cannot hire all the workers they want.
“The job market might be slowing down a bit, but that might not be enough to really push us into a recession,” said Nick Bunker, director of economic research at Indeed Hiring Lab.
Still, some sectors have been slow to fully recover from the pandemic, such as leisure and hospitality and childcare. In June, the leisure and hospitality sector added 67,000 jobs and helped boost overall profits, but the industry is still down 1.3 million jobs compared to February 2020. Healthcare employment also rose by 57,000 in June, but the sector is down 176,000 jobs, or 1.1 percent, since February 2020.
“Too many people remain excluded from the labor market, making it difficult for companies to hire workers,” said Beth Ann Bovino, chief US economist at S&P Global.