Despite persistent inflation and fears of a recession, hiring remained strong in June. Friday’s Labor Department report showed that employers added 372,000 jobs to their workforce, more than the 270,000 predicted by economists.
The unemployment rate was 3.6%, which is close to the pre-pandemic low.
Julia Pollak, ZipRecruiter’s labor economist, stated in a note that today’s jobs report was a landmark marking a more than-full recovery of private-sector employment. “Employment gains were surprising broad-based, even in the most sensitive industries to interest rate rises.”
The government reported an increase in professional and business services as well as leisure and hospitality and health care. Despite the high-profile layoffs in tech companies in May/June, the information sector gained 25,000 jobs.
Manufacturing added 29,000 jobs, bringing its employment back to pre-pandemic levels. Transport and warehousing created 36,000 new jobs.
The number of government jobs fell by 9,000.
Monthly job growth has slowed to an average of 500,000 for the first three months of this year and an average 370,000 for the third. A month in which 200,000 jobs were created was considered strong before the pandemic.
The government also revised down its initial estimates for May and Juni to show that 74,000 more jobs were created than originally thought. The slowing of wage growth, which saw the average salary rise 5.1% annually, is a sign that the market for jobs is cooling.
“The average hourly wage fell to 5.1% in June for the third consecutive month, down from 5.6% at its peak. Although wage growth is still strong, it continues to trail inflation, especially for household essentials like food, fuel, and housing,” Joel Kan (assistant vice president of Economic and Industry Forecasting, Mortgage Bankers Association) stated in a research paper.
The participation rate of workers aged 25-54, which is a measure of people who are looking for work or working, fell slightly.
These figures make it difficult for the Federal Reserve to slow down inflation without causing a national recession. Already, the Fed has begun its fastest rate hikes since 1980s. Further increases could make borrowing more expensive for consumers and businesses, increasing the likelihood of a recession.
The Fed might view the June job growth as proof that the Fed is promoting inflation by allowing companies to compete for workers.
Powell admitted last month that the Fed’s rate increases were likely to increase unemployment. He also said that foreign factors such as Russia’s invasion in Ukraine, which has raised gas prices and food prices, would make it difficult for the Fed to avoid a recession.
Reporting was contributed by The Associated Press.
