In spite of indications of sluggish economic growth, the US economy still managed to create 372,000 new jobs in June.
The jobs report is regarded as a crucial barometer for determining whether high inflation—and central bank efforts to tame it with interest rate increases—is starting to bite into the broader American economy.
The labor department reported on Friday that the US unemployment rate remained unchanged at 3.6 percent, the same as one month earlier. According to consensus estimates, economists had predicted that the US would add about 278,000 jobs last month. However, job growth was significantly higher.
The figures may allay some concerns about an impending recession, but they also demonstrate that the Federal Reserve has more room to raise interest rates in its fight against historically high inflation, which would cool consumer demand.
The professional and business services sector, leisure and hospitality, and healthcare all saw significant job growth in June. However, the department reported that the overall US labor force participation fell from 62.3 percent to 62.2 percent.
Joe Biden said in a statement that “no country is better positioned than America to bring down inflation, without giving up all of the economic gains we have made over the last 18 months.”
Inflation is at a 40-year high, and rising interest rates are causing US consumers to cut back on their spending, according to statistics. Consumer spending increased by 0.2% in May, down from 0.6% in April. Construction of new homes and manufacturing output are declining.
According to Andrew Hunter, senior US economist at Capitol Economics, “the strong 372,000 gain in non-farm payrolls in June appears to make a mockery of claims the economy is heading into, let alone already in, a recession.”
“The job market is still strong with 5.9 million unemployed people and more than 11 million open positions, according to the most recent data from the labor department. According to Mark Hamrick, senior economic analyst at Bankrate.com, one obstacle is that the labor force participation rate is still stuck at just above 62 percent, which is still below the pre-pandemic level.
“The employment report does not deter Federal Reserve officials from continuing with their plans to raise interest rates in an effort to bring inflation down and closer to their target of 2 percent. The Consumer Price Index, which is due in the coming days, will be the Fed’s next important reading.
Although the jobs report indicates that hiring is consistent with the previous four months, many economists anticipate a slowdown in job growth. As the economy weakens, it is not yet clear if businesses will also eliminate existing positions.
According to employment statistics, the number of Americans requesting unemployment benefits increased to 230,000 on Thursday, the highest level in almost six months.
