US unemployment rate held steady at 3.6%, labor department said, as jobs report indicated resilience
The US economy added 372,000 jobs in June, an indicator of resilience despite signs of slowing economic growth.
The jobs reports is seen as a key indicator on whether high inflation – and central bank efforts to tame it with interest rates rises – is beginning to bite down on the wider American economy.
The US unemployment rate held steady at 3.6%, the same as month earlier, the labor department said on Friday. Job growth far exceeded the projections of economists, who expected the US to add roughly 278,000 jobs last month, according to consensus estimates.
The figures may ease some fears of a looming recession, but also show that the Federal Reserve has more room to raise interest rates, cooling consumer demand, in its fight against historically high inflation.
Job gains in June were notable in the professional and business services, leisure and hospitality, and healthcare. However, overall US labor force participation declined from 62.2% from 62.3%, the department said.
“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,” Joe Biden said in a statement.
US consumer figures are showing signs of curbing spending as they face inflation at a 40-year high and rising interest rates. In May, consumer spending increase 0.2%, down from 0.6% in April. Home construction and manufacturing production is declining.
“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,” said Andrew Hunter, senior US economist at Capitol Economics.
“With more than 11m job openings according to the labor department’s last count, and 5.9 million persons unemployed, the job market remains strong. One factor standing in the way, labor force participation remains stuck at just above 62%, still below the pre-pandemic level,” said Mark Hamrick, senior economic analyst at Bankrate.com.
“The employment report does nothing to dissuade Federal Reserve officials from sticking to their interest rate raising plans, looking to send inflation down, and closer to their 2% target. The next key reading for the Fed is the Consumer Price Index due in the days ahead.”
While the jobs report shows that hiring is consistent with the four previous months, many economists expect job growth will slow. It is not yet clear if companies will also cut back on existing jobs as the economy softens.
On Thursday, employment data showed the number of Americans applying for unemployment benefits hit the highest level in almost six months at 230,000.