US labor market advances with solid job gains despite recession fears

  • Nonfarm payrolls increased 372,000 in June
  • The return of private sector employment above the pre-pandemic level
  • The unemployment rate is steady at 3.6%.
  • Average hourly earnings are up 0.3%; 5.1% year-over-year increase

WASHINGTON, July 8 (Reuters) – U.S. employers hired far more workers than expected in June and continued to raise wages at a steady rate, signs of continued labor market strength that give the Federal Reserve ammunition to offer another interest rate by an amount 75 basis points. raise this month.

A closely watched Labor Department employment report on Friday also showed no indication that companies were reducing working hours for workers. The number of people working part-time for economic reasons has fallen to its lowest level in nearly 21 years.

Strong job growth allayed fears of an imminent recession and gave hope that any downturn would be mild.

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“If you’re looking at this report for signs that we’re already in a recession, it probably comes across as blank,” said Nick Bunker, an economist at Indeed, Washington. “Right now, employers continue to hire a large number of workers at higher wages. This is something to celebrate.”

The Enterprise Survey showed that non-farm payrolls increased by 372,000 jobs last month. It was the fourth consecutive month of job gains that topped 350,000 jobs and left 524,000 jobs below the pre-pandemic level. The private sector has regained all the jobs it lost during the COVID-19 pandemic, and employment has reached 140,000 jobs higher than it was in February 2020. Government employment remains in limbo at 664K.

Economists polled by Reuters had expected 268,000 jobs to be added, with estimates ranging from 90,000 to 400,000. The professional and business services industry led the big increase in June, adding 74,000 jobs. Leisure and hospitality payrolls rose by 67,000 jobs. But employment in the industry is still down by 1.3 million since February 2020.

There were also strong salary gains in the healthcare and information areas as well as the transportation and warehousing industries. Manufacturing added 29,000 jobs and regained all the jobs lost during the pandemic. Construction salaries increased by 13,000 jobs.

The economy created 2.74 million jobs in the first half. President Joe Biden welcomed the strong employment gains.

“No country is in a better position than America to bring down inflation without giving up all the economic gains we’ve made over the past 18 months,” Biden said in a statement.

Stocks fell on Wall Street. The dollar fell against a basket of currencies. US Treasury yields rose.

Various stagnation of the labor market is strong despite the contraction of GDP in the January-March quarter. A slew of tepid reports ranging from consumer spending in May to housing and manufacturing has most economists expecting GDP to decline again in the second quarter.

However, as the labor market tightens, the second consecutive contraction in quarterly GDP does not mean a recession.

“But if the US economy is in or about to enter a recession, this will be a recession of a very different nature than other historical downturns,” said Noah Williams, associate fellow at the Manhattan Institute.

“Recessions have been largely characterized by a decline in employment, usually beginning with a slowdown in hiring by firms. Such a slowdown has not yet occurred on a large scale.”

The Fed wants to cool the demand for labor to help bring inflation down to a 2% target. The US central bank in June raised its benchmark interest rate by three-quarters of a percentage point, its largest rise since 1994. Markets overwhelmingly expect the Federal Reserve, which has raised its policy rate by 150 basis points since March, to unveil another 75 points. . -basis-point at its meeting later this month.

Inflation data for June next Wednesday, which is expected to show an acceleration in consumer prices, is also expected to give policymakers more coverage to increase borrowing costs further.

Average hourly earnings rose 0.3% in June after rising 0.4% in May. This cut the year-over-year increase to 5.1% from 5.3% in May. Despite the slowdown, wage pressures remain strong, with average hourly earnings for production workers increasing 0.5%. It rose 6.4% year-on-year.

With 11.3 million jobs available at the end of May and nearly two jobs for every unemployed person, wages will continue to rise. Read more

The average workweek remained steady at 34.5 hours. The details of the household survey from which unemployment is derived were mixed. The unemployment rate was unchanged at 3.6% for the fourth consecutive month as 353,000 people left the labor force, nearly half of whom were women. As a result, the labor force participation rate, or the proportion of working-age Americans who have a job or are looking for a job, fell to 62.2% from 62.3% in May.

Domestic employment decreased by 315,000 jobs. But the number of people working part-time for economic reasons fell by 707,000 to 3.6 million, the lowest level since August 2001.

A broader measure of unemployment, which includes people who want to work but have given up searching and who work part-time because they cannot find full-time work, fell to 6.7%. It was the lowest since the government began tracking the chain in 1994 and fell from 7.1% in May.

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(Reporting by Lucia Mutikani) Editing by Shizuo Nomiyama

Our Standards: Thomson Reuters Trust Principles.

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