There were fewer jobs in June, but the labor market remained tight. A man walks past a “currently hiring” sign posted outside a restaurant in Arlington, Va., last month.
Olivier Douliery / AFP via Getty Images
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Olivier Douliery / AFP via Getty Images
There were fewer jobs in June, but the labor market remained tight. A man walks past a “currently hiring” sign posted outside a restaurant in Arlington, Va., last month.
Olivier Douliery / AFP via Getty Images
Hiring slowed only slightly last month, and the US job market is still recovering despite high inflation and weak economic growth.
The Labor Department said Friday that employers added 372,000 jobs in June. The unemployment rate held steady at 3.6%, while the labor force fell by 353,000 people.
Job growth has slowed since the first third of the year, when employers added an average of nearly 500,000 jobs a month. However, economists say the decline is not surprising, as the US has now replaced most of the jobs lost during the pandemic recession two years ago.
Employment in private sector businesses is now higher than it was in February 2020, while government employment remains low.
“That shouldn’t be seen as a terrible thing or a major slowdown or an impending recession,” said Julia Pollak, chief economist at job search site ZipRecruiter. She noted that hiring is still significantly stronger than in 2019, when employers added an average of 164,000 jobs per month.
Some industries fell more than others in June. Construction companies added just 13,000 jobs in the month – less than half the month before – as home construction activity fell due to rising mortgage rates.
The leisure and hospitality sector, which includes restaurants and hotels, added 67,000 jobs, as it continues to recover from a deep slump at the start of the pandemic.
“There’s a lot of people out there traveling, eating out. So there’s still a lot of demand for these workers,” said Wells Fargo senior economist Sarah House.
The combination of job gains also reflects a shift in consumer behavior. Over the past two years, Americans have comfortably spent on furniture and other goods, boosting jobs at warehouses and transportation companies. House hopes those profits will cool down, as people are now spending more money on services like airline tickets and concert tickets.
“There has been a decline in commodity spending,” she said. “I think there are some areas that are ripe for weaker job growth.”
Warehousing and transportation companies added 36,000 jobs in June, down from 59,000 the previous month.
Some slowdown may be welcome
The Federal Reserve is deliberately exploiting the brakes on the economy, in an attempt to curb inflation, which is highest in four decades. Central bank interest rate hike by 0.75 percentage points in June. Another similar rate hike is expected later this month.
While the Fed is not trying to push for layoffs, it would welcome some cooling of the red-hot job market.
“Even if you see a slowdown in job growth, if it comes with some pressure on wages, I think the Fed can live with that,” House said.
Average wages in June were 5.1% higher than a year ago. This is down slightly from 5.2% in the 12 months ending in May.
One More and more economists are worried that inflation is already so high that the Fed will need to ease the difficulty to control prices, which could send the economy into recession. In recent weeks, fear has led to significant volatility in the stock market.
Employees and businesses are becoming more cautious
While last month’s job gains hardly indicated a recession, there are some signs that both employers and workers are becoming more cautious. Job postings in early June decreased slightly from the previous month.
The number of workers who voluntarily quit their jobs also decreased significantly. A recent survey by ZipRecruiter found a drop in the number of workers who believe jobs will be more abundant six months from now.
“They are still doing well in their current job searches, with many people having many offers to choose from,” says Pollak. “However, they see all the headlines about a possible recession, and that makes them nervous about the future.”
