The US added 372,000 jobs in June, beating forecasts as the economy edges closer to pre-crisis employment
- The US added 372,000 jobs in June, surpassing the average forecast of 268,000 new payrolls.
- The unemployment rate held at 3.6%, landing matching the median estimate.
The economy added 372,000
Job growth in April was updated to a final increase of 368,000 payrolls from 436,000.
The unemployment rate held at 3.6%, according to the report. Economists largely expected the rate to hold steady through the month. Unemployment has lingered at historic lows in 2022 as intense demand for labor leads most job seekers to quickly find work.
Education and health services firms led the way in June, adding 96,000 jobs through the month. Professional and business services firms followed with a 74,000-payroll increase. Leisure and hospitality businesses added 67,000 jobs, with 41,000 of those added payrolls coming from restaurants and bars.
Residential building contractors shed 4,500 jobs, underscoring the bottlenecks behind the nationwide housing shortage. Payroll counts also declined among electronics manufacturers, furniture stores, warehouse clubs, and in the federal government.
Job creation has slowly tapered off from last year's historically fast pace partially due to higher interest rates. The Federal Reserve raised its benchmark rate by 0.75 percentage points in June, marking the first such hike since 1994. Higher rates make borrowing more expensive and tend to depress consumer demand. But while rising rates typically slow companies' hiring plans, intense demand for workers is expected to linger through the summer.
"The economy may be cooling off but hiring remains red hot," James Neave, head of data science at job search platform Adzuna, said. "Companies that can't find the staff to meet demand will likely keep hiring, even as prices rise and with the Federal Reserve threatening further interest rate rises."
Other data suggests higher rates and elevated inflation are biting into a major driver of job creation. Americans' spending at stores and restaurants unexpectedly declined in May, marking the first drop in spending since December. Should retail sales continue to drop, lower revenues will probably lead firms to add payrolls at a slower clip.
Job creation was also expected to slow as the economy crept closer to full employment, and the latest data shows the
The mild slowdown is exactly what the Biden administration and the Fed want to see through the rest of 2022. The labor market is still rebounding at a strong pace despite the central bank's battle against inflation. The moderating growth rate also closes the gap between worker supply and employer demand. Fed Chair Jerome Powell has said in recent weeks that, while the Fed's rate hikes can't directly lower gas or food costs, it can address imbalances in the labor market.
Pay data published Friday signals demand for workers has only slightly cooled. Average hourly earnings rose by $0.10, or 0.3%, to $32.08 in June, matching economist forecasts and easing from May's gain of $0.12. The print hints that inflationary pressure from wages could be easing even as the labor market remains unusually tight.
The report had some blemishes, however. Labor force participation ticked slightly lower to 62.2%, falling further from the pandemic-era high observed in March. The measure tracks the share of Americans either working or actively seeking work, and its sluggish recovery has been the biggest factor powering the labor shortage. If participation doesn't swing higher in the months ahead, the gap between labor supply and demand could widen and raise fresh concerns about wage-based inflation.
The US may be on the verge of a full labor-market recovery, but several pressures still loom large.
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