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- The U.S. economy added 206,000 jobs in June, more than the forecast of 191,000.
- The unemployment rate rose from 4.0% in May to 4.1% in June.
- Data released earlier this week showed job openings rose slightly from 7.9 million in April to 8.1 million in May.
The US labor market performed only slightly better than expected, adding 206,000 jobs in June. Meanwhile, the unemployment rate unexpectedly rose from 4.0% in May to 4.1% in June.
According to the forecast According to Investing.com, the US economy was expected to add 191,000 nonfarm jobs in June.
According to a Press release According to a report from the Bureau of Labor Statistics on Friday, job growth for May was revised from 272,000 to 218,000, and April job growth was revised from 165,000 to 108,000. That’s a significant revision, with 111,000 fewer jobs created than previously reported for April and May, according to a BLS news release Friday.
“We had a very tight and robust labor market, where there was a lot of turnover and a kind of fervent hiring, and that has cooled off,” Nick Bunker, director of economic research for North America at Indeed Hiring Lab, told Business Insider. “That means we’re back to a balanced and sustainable labor market. But if that cooling continues, we’re not going to be in as nice a place as we are now.”
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Government jobs saw solid growth in June, gaining 70,000. The health care sector added 48,600 jobs. Manufacturing and retail trade saw employment declines. Professional and business services also saw a loss of 17,000. Leisure and hospitality, which was adding tons of jobs during the pandemic recovery, only saw job growth of 7,000 in June.
“We’re a service economy, and the service sector now appears to be battling the kind of ongoing downturn that first hit interest rate-sensitive sectors,” Julia Pollak, chief economist at ZipRecruiter, told BI. “We first saw the technology, housing and real estate industries cool off, but now we’re seeing the weakness spreading to services, and that’s the primary driver of job growth in the U.S. economy.”
Investing.com noted that the forecast The US unemployment rate in June was 4.0%. For the past several years, the unemployment rate has remained at a historically low level, and while inflation remains persistent, Nobel Prize-winning economist Joseph Stiglitz recently told Business Insider how remarkable it was that the inflation rate had cooled so quickly (after the rate spiked to 9.1% in June 2022), while the unemployment rate did not have to rise as it fell.
“The unemployment rate remains at historic lows. We’ve done so well that people, when they see 4.1 percent, say, ‘Wow, it’s up!'” Acting Labor Secretary Julie Su told BI. She added: “It’s been at or below 4 percent for the longest period since Neil Armstrong walked on the moon. That was historic. It’s now up slightly, but it’s still very low by historical standards.”
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Stocks rose slightly after the report, as mixed signals from the headline job growth figure and rising unemployment rate could signal a greater willingness by the Fed to cut interest rates this year.
“I think this report will further cement the idea that the labor market has cooled, has moderated, and that hopefully there will be some more good inflation reports on the way, and that will give them more confidence about where they can cut interest rates,” Bunker said.
Pollak said that with the labor market slowing, including in the services sector, and “leading indicators pointing to further weakness ahead,” this should prompt a debate at the Fed about when to cut rates.
“The unemployment rate has gone up a lot, and when it goes up, it tends to keep going up,” Pollak said, adding that there was a fairly large increase in the number of people considered long-term unemployed.
Other indicators show the labor force remains strong. Labor force participation includes those working and those actively seeking work, and this rate rose from 62.5% in May to 62.6% in June. The share of working-age Americans, or those between 25 and 54, who have a job held steady at 80.8%.
Wage growth moderated. Average hourly earnings rose from $33.70 in June 2023 to $35.00 last June, an increase of 3.9%, slightly lower than the year-over-year rate in May of 4.1%. Average hourly earnings also rose from $34.90 last May, or 0.3%.
Other labor market data A study released earlier this week showed that job openings and resignations did not change much in May, with job openings increasing by 221,000, from 7.9 million in April to 8.1 million in May. The resignation rate has been 2.2% for seven consecutive months, and there were 3.5 million resignations in May.
“In May, the labor market continued to improve its balance, with stable openings and low separations,” Elizabeth Renter, senior economist at NerdWallet, said in a written note earlier this week, adding that the new data was “further encouragement that the current labor market supports continued moderation in inflation and that a September rate cut could still be in play.”
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