U.S. added a solid 209,000 jobs in June in a sign of economic resilience, despite slowing hiring
WASHINGTON (AP)—U.S. employers held back on hiring before delivering another solid month of job gains in June, adding 209,000 jobs. It’s a sign that economic resilience is disrupting the Federal Reserve’s push for slowing growth and inflation.
The latest evidence of economic strength makes it all but certain that the Fed will resume rate hikes later this month after ending 10 straight rate hikes aimed at keeping inflation under control.
The government’s June employment figures on Friday were below the levels recorded in recent months. However, this still points to a durable labor market with historically high job posting numbers. The unemployment rate fell from 3.7% to 3.6%, nearing its lowest level in 50 years.
The economy is plagued by high interest rates, rising inflation, and deep-seated concerns about the possibility of a recession from the Fed raising interest rates. However, many industries are still adding jobs to meet consumer demand and bring workforces back to pre-pandemic levels.
A solid hiring pace and rising wages allowed consumers to continue spending on services ranging from travel to dining out to attending entertainment events. Economists have repeatedly predicted a recession later this year or next year, but a recession is unlikely as long as companies continue to steadily add jobs.
This is the latest news. Here’s a previous article from the Associated Press:
WASHINGTON (AP) – U.S. jobs are expected to be strong again on Friday, a result that suggests a recession is not on the horizon, but the Federal Reserve is set to cool the economy. It can complicate the success of containment efforts. high inflation.
Employers are expected to add 205,000 jobs in June, according to economists surveyed by data provider FactSet. Although lower than recent monthly increases, this represents a healthy increase and likely reflects historically high job postings.
As the Fed hikes its key interest rate by a whopping 5 percentage points (the fastest pace in 40 years), continued strong employment will underscore the economy’s astonishing resilience. . These increases have made mortgages, auto loans, and other forms of borrowing significantly more expensive. But consumers are still spending more, providing a modest incentive for some companies to keep hiring and expanding.
Economists expect the unemployment rate to drop to 3.6% last month from 3.7%, near a 50-year low.
Even a modest increase in June’s employment numbers would effectively increase the likelihood that the Fed will resume rate hikes at its next meeting later this month. Until last month’s moratorium, the central bank had raised the base rate ten times in a row. At the time, Fed Chairman Jerome Powell said the Fed had held off on raising rates as policymakers considered how the sharp rise in borrowing costs was affecting the economy.
At the June meeting, Fed policymakers indicated they expected another two quarters of point rate hikes by the end of the year. Fed watchers had previously expected officials to signal one more rate hike this year. Their latest forecast shows that while inflation has fallen significantly from its peak, the 4% level is still well above the Fed’s 2% target, and more efforts will be needed to overcome inflation. It reflects the belief of many Fed officials that it is necessary.
Dallas Fed President Rory Logan suggested on Thursday that continued high inflation and a “better-than-expected labor market” mean borrowing costs will need to rise further.
“I remain very concerned about whether inflation will return to target in a sustainable and timely manner,” Logan said at a meeting of central banks in New York. “And I think we will need more restrictive monetary policy.”
Other Fed officials are looking for signs of what they call a more balanced job market, a more even supply and demand for workers. After the economy recovered from the pandemic, the number of available jobs surged to a record high, he surpassed 10 million. This surge in labor demand has coincided with millions of Americans leaving the workforce to retire, avoid COVID-19, care for relatives, or prepare for new careers.
As many companies struggled to fill large numbers of job openings, many offered significantly higher salaries and better benefits to attract and retain employees. Fed officials continue to worry that rising wage levels will lead to a chronic rise in inflation if businesses pass on rising labor costs by raising prices.
Some progress has been made towards better balancing supply and demand, with nearly 2 million people starting to look for work in the past seven months and most finding jobs. Companies say more people are applying for open positions as the supply of workers improves. Job vacancies also fell in May, still higher than before the pandemic, but suggesting a gradual cooling in demand for workers.
Another sign of a potential job market slowdown is fewer Americans leaving their jobs to look for new jobs. Smoking cessation surged after the pandemic. Millions of Americans were looking for more meaningful and higher-paying jobs, increasing pressure on companies to raise wages to retain workers. About 4 million Americans left their jobs in May, up from April but still short of last year’s peak of 4.5 million.
“Amid heightened economic uncertainty, workers are slightly less willing to change jobs, indicating a slowdown in the labor market,” said Luke Perdue, an economist at Gusto, which makes payroll software for small businesses. There may be,” he said. business.
Still, other recent reports suggest the economy continues to expand and demand for workers remains high. On Thursday, a survey of service providers, including banks, restaurants and shipping companies, found that the sector expanded well in June, with service firms accelerating their hiring compared to May.
Also on Thursday, payroll firm ADP reported an explosion in hiring by private employers in June, adding 497,000 jobs. However, ADP employment statistics often diverge from official government data.
“Economists and analysts have repeatedly predicted a significant slowdown in the jobs report, but in the past six months that has not materialized,” Pardue said. “The job market has remained remarkably resilient, despite many saying the economy is heading for recession in the short term.”
https://www.washingtontimes.com/news/2023/jul/7/us-slowed-hiring-still-added-solid-209000-jobs-jun/?utm_source=RSS_Feed&utm_medium=RSS U.S. added a solid 209,000 jobs in June in a sign of economic resilience, despite slowing hiring
