The U.S. has a resilient job market despite the high inflation and slowing economic growth.
Friday’s Labor Department report stated that 372,000 new jobs were created by employers in June, according to the Labor Department. While the unemployment rate remained stable at 3.6%, the labor force shrank by 353,000.
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Since the beginning of the year, employers added an average of nearly 500,000 jobs each month on average, job gains have slowed. Economists believe that a slowdown is not surprising given the fact that most of those jobs were replaced by the U.S. during the pandemic downturn two year ago. While private sector employment is now higher than in February 2020, government employment remains low.
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Julia Pollak, chief economist at ZipRecruiter, said that “it shouldn’t be considered a terrible thing” or a slowdown or impending recession. Her observation was that hiring is still much stronger than it was in 2019, when employers added an average 164,000 jobs per month.
In June, some industries experienced a slower pace than others. Due to rising mortgage rates, construction companies added only 13,000 jobs in June.
As it continues to recover from the deep slump that occurred early in the pandemic, 67,000 new jobs were added to the leisure and hospitality sector.
“There are a lot people out there going out to eat, and traveling. Senior economist Sarah House of Wells Fargo said that there is still a great demand for these workers.
This mix of job growth also reflects changes in consumer behavior. The past two years saw Americans spend freely on furniture and other goods, which boosted employment in warehouses and transport companies. House believes that these gains will slow down now that more people spend money on services like airfare and concert tickets.
She stated that there has been a decline in goods spending. “I believe there are areas that are ripe to see weaker job growth.”
Transport companies and warehouses added 36,000 jobs in June, compared to 59,000 the previous month.
In an attempt to reduce inflation, the Federal Reserve has deliberately slowed down the economy. In June, the central bank increased interest rates by 0.75 percent. A similar rate increase is expected to occur later in the month.
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The Fed does not want to encourage layoffs but it would be nice to see some cooling in what has been an extremely hot job market.
House stated, “Even though you see a slowdown of job growth, if that’s accompanied by some wage pressures, I think it’s okay for the Fed to live with that.”
The average wage in June was 5.1% more than one year ago. This is slightly lower than the 5.2% average wage for the 12 months ended in May.
Economists are becoming more concerned that inflation is so high that the Fed will have to take drastic measures to control prices. This could lead to the economy going into recession. This fear has caused volatility in the stock markets over recent weeks.
Although the job gains last month did not indicate an economic downturn in any way, there are signs that both workers and employers are becoming more cautious. The number of job postings in June was slightly lower than the previous month.
Also, the number of people quitting their jobs voluntarily has declined. ZipRecruiter recently found that there was a decline in workers who think jobs will be easier six months from now.
Pollak stated that “they are still doing well with their current job search, with many having multiple offer to choose from.” “But they are worried about the future because of all the news about possible recessions.”
