The better-than-expected job growth eases recession fears
US job growth remained robust in June despite economic headwinds, the Bureau of Labor Statistics reported Friday.
Nonfarm payrolls increased by 372,000 last month, exceeding the 250-290k range analysts were anticipating – although negative revisions from April and May brought that figure down by a combined 74,000. The unemployment rate held steady for the fourth consecutive month, hovering at 3.6% with the number of unemployed persons essentially unchanged at 5.9 million in June.
“Considering the revisions to prior months, the June employment report came in approximately in line with our Q2 expectations and is unlikely to significantly change our near-term forecast,” said Nathaniel Drake, associate at Fannie Mae’s Economic and Strategic Research Group.
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While the June reading confirms a healthy labor market, data from the Job Openings and Labor Turnover Survey (JOLTS) showed that job openings and quits declined for the second straight month in May, down by 427,000 and 57,000 respectively. But both remained elevated at 11.3 million and 4.2 million.
“Though the pace of hiring has slowed gradually over the past several months and the JOLTS survey has shown a potential easing to overall tightness in the labor market,” added Drake.
Job gains were strongest in the professional and business services (+74,000), leisure and hospitality (+67,000), and healthcare sectors (+57,000). Meanwhile, employment in other industries showed little change over the month, including construction (+13,000), mining and logging (+6,000), financial activities (+1,000), and government (-9,000).
Average hourly earnings in June rose at the expected +0.3% rate but were slightly down from the upwardly revised +0.4% the previous month. However, the labor participation rate continues to lag at 62.2%.
The primary takeaway from the June employment report, Drake said, is that the labor market remains much stronger than levels typically associated with a recession.
In a statement, President Joe Biden celebrated the encouraging hiring report but set the expectations that job growth is set to slow soon. “Having added a record number of new jobs, and achieved historically low levels of unemployment, additional job growth from this strong position will be slower. That is not a bad thing, because our economy should move to stable growth for the years ahead,” he said.
