US slowed hiring but still added a solid 209,000 jobs in June in sign of economy's resilience
America’s employers pulled back on hiring but still delivered another month of solid gains in June, adding 209,000 jobs, a sign that the economy’s resilience is confounding the Federal Reserve’s drive to slow growth and inflation.
The latest evidence of economic strength makes it all but certain that the Fed will resume its interest rate hikes later this month after having ended a streak of 10 rate increases intended to slow inflation.
The June hiring figure reported by the government Friday is below the levels recorded in recent months. But it still points to a durable labor market that also features a historically high number of advertised openings. The unemployment rate fell to 3.6% from 3.7%, and is near a five-decade low.
The economy is beset by high interest rates, elevated inflation and nagging worries about a possible recession resulting from the Fed’s ever-higher interest rates. Yet many industries are still adding jobs to keep up with consumer demand and restore their workforces to pre-pandemic levels.
The solid pace of hiring and rising wages have enabled consumers to keep spending on services, from traveling to dining out to attending entertainment events. While economists have repeatedly forecast a recession for later this year or next year, a downturn is unlikely as long as companies keep steadily filling jobs.
Chair Jerome Powell has said that worker demand for higher pay to keep up with inflation can perpetuate inflation if employers pass on their higher costs to their customers. The Fed wants to see hiring and wage increases slow before halting its rate hikes.
The Fed has jacked up its key interest rate by a sizable 5 percentage points — the fastest pace of rate hikes in four decades. Those increases have made mortgages, auto loans and other forms of borrowing significantly more expensive.
Some Fed officials have said they are looking for signs of what they describe as better balance in the job market, by which they mean the supply and demand for workers would become more equal. After the economy emerged from the pandemic, the number of available jobs surged above 10 million — the highest level on record.
The burgeoning demand for labor coincided with millions of Americans dropping out of the workforce to retire, avoid COVID, care for relatives or prepare for new careers. With companies struggling to fill openings, many offered sharply higher pay and better benefits to attract or keep employees.
There has been some progress toward a better alignment of supply and demand: More people have started looking for work in recent months, and most of them have found jobs. As the supply of workers has improved, businesses have said they’re seeing more people apply for open positions. The number of job openings dropped in May, a sign that demand for workers is gradually cooling, though it remains above pre-pandemic levels.
In a sign of a potential slowdown in the job market, fewer Americans are quitting their jobs to seek new positions. Quits had soared after the pandemic. Millions of Americans had sought more meaningful or better-paying jobs, stoking the pressure on companies to raise pay to keep their employees. In May, about 4 million Americans left their jobs, up from April’s figure but below a peak of 4.5 million reached last year.
Still, other recent reports suggest that the economy has continued to expand and that demand for workers remains high. On Thursday, a survey of service providers — including banks, restaurants and shipping companies — found that the sector expanded at a healthy clip in June and that services companies accelerated their hiring compared with May.
Also on Thursday, the payroll provider ADP reported an explosive increase in hiring by private employers in June — 497,000 added jobs. ADP’s hiring figures, though, often diverge from the government’s official data.