Summary
Nonfarm payrolls increase 209,000 in June
Unemployment rate falls to 3.6% from 3.7% in May
Hourly earnings increase 0.4%; up 4.4% year-on-year
Average workweek rises to 34.4 hours from 34.3 hours
WASHINGTON, July 7 (Reuters) – The U.S. economy added the fewest jobs in 2-1/2 years in June, but persistently strong wage growth pointed to still-tight labor market conditions that most certainly ensure the Federal Reserve will resume raising interest rates later this month.
The Labor Department’s closely watched employment report on Friday also showed 110,000 fewer jobs were created in April and May, indicating that higher borrowing costs were starting to dampen businesses’ appetite to continue boosting headcount. There was also a jump in the number of people working part-time for economic reasons last month, in part because their hours had been reduced due to slack work or business conditions.
Nevertheless, the pace of jobs growth remains strong by historical norms and added to data this week showing an acceleration in services sector activity in suggesting that the economy was nowhere near a long-forecasted recession.
“The payroll numbers gave a whiff of weakening, but the labor market remains strong,” said Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting. “By no means is the Fed’s work done. We’re in a protracted battle against inflation, and nothing in today’s report suggests otherwise.”
Nonfarm payrolls increased by 209,000 jobs last month, the smallest gain since December 2020, the survey of establishments showed. Economists polled by Reuters had forecast payrolls rising 225,000. It was the first time in 15 months that payrolls missed expectations.
Job growth averaged 278,000 per month in the first half of the year. The economy needs to create 70,000-100,000 jobs per month to keep up with growth in the working-age population.
Employment growth is in part being driven by companies hoarding workers, a legacy of the dire labor shortages experienced as the economy rebounded from the COVID-19 pandemic downturn in 2021 and early 2022.
While higher-paying industries such as technology and finance are purging workers, sectors like leisure and hospitality as well as local government education are still catching up after losing employees and experiencing accelerated retirements during the pandemic.
Government employment increased by 60,000, boosted by a 59,000 rise in state and local government payrolls. Government employment remains 161,000 below its pre-pandemic levels.
Private payrolls increased 149,000, also the smallest gain since December 2020. Healthcare payrolls rose 41,000, reflecting increases in hiring at hospitals, nursing and residential care facilities as well as home health care services.
Construction employment jumped by 23,000. The housing market is showing signs of revival after being battered by a surge in mortgage rates. The Fed has raised its policy rate by 500 basis points since March…
Post from www.reuters.com