Labor department jobs report, US job growth stronger than expected

U.S. job growth was stronger than expected in June, with the economy adding 372,000 jobs and the unemployment rate holding at 3.6%, data from the Bureau of Labor Statistics showed on Friday. The data showed that employment growth has slowed slightly but resiliently despite the Fed’s sharp increase in borrowing costs. The leisure and hospitality sector continued to grow strongly, adding 67,000 jobs, albeit down slightly from the previous month’s increase. Jobs were also created in healthcare, professional and business services.

labor department jobs report

labor department jobs report

The labor force participation rate, a measure of working-age Americans who have jobs or are actively looking for work, fell to 62.2% in June, suggesting workers remained on the sidelines. The figure was 1.2 percentage points lower than pre-pandemic levels in February 2020. Wage growth – a key indicator for inflation watchers who focus on consumer demand – rose 0.3% from the previous month and 5.1% from last year. The measures were largely unchanged from the report released a month ago.

The timing of new data is erratic. Across the economy, severe financial distress is likely to intensify as the Federal Reserve implements a series of rate hikes aimed at curbing skyrocketing inflation, but could tip the economy into recession. At its last meeting last month, the Fed raised interest rates by 0.75%, the largest increase since 1994.

“It’s amazing how amazing the economic forecasts are,” said Teresa Ghilarducci, a labor economist at the New School for Social Research. “Inflation was the theme before the Fed met last month, and now It’s a recession,” she added. Adding to the economic uncertainty, the S&P 500 posted its worst first-half performance since 1970, falling 20.5%. During the period, the tech-heavy Nasdaq fell further, falling more than 28%.

Image: Federal Reserve Chairman Jerome Powell answers questions during a news conference following a two-day Federal Open Market Committee (FOMC) meeting on June 15, 2022 in Washington, DC. Economic data released this week showed mixed results for the labor market. The U.S. Bureau of Labor Statistics reported Wednesday that employers posted 11.3 million job openings in May, down from a peak of 11.8 million in March but well above pre-pandemic levels. Statistics show that labor demand fell in May but remained strong.

On the other hand, data from the Labor Department on Thursday showed initial jobless claims were 235,000 last week, an increase of 4,000 from the previous week and the highest level since mid-January. Data suggests that the tight labor market may be easing, which could be a sign of an economic slowdown. Labor economist Ghilarducci warned that persistently low unemployment in June may not be indicative of a healthy economy, as unemployment tends to lag broader economic trends.

“The unemployment rate is a record for another era,” she said. Still, the White House and the Fed are closely watching to see if the jobs data reveals a delicate balance between battling sky-high prices by slowing demand while avoiding the kind of sharp slowdown that could lead to a recession. Strong new hires have made the monthly jobs report a recurring indicator of a hot U.S. jobs market in recent months.

Before May, the U.S. had created at least 400,000 jobs for 12 straight months. Over the past three months of employment data – from March to May – the unemployment rate was 3.6%, slightly higher than the 3.5% unemployment rate recorded in the U.S. in February 2020.

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