June jobs report shows 372,000 gains

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Employers added 372,000 jobs in June as the sizzling labor market shrugged off a slowing economy, high inflation and rising interest rates

The jobless rate held steady at 3.6% for the fourth straight month, just above a 50-year low, the Labor Department said Friday.

Economists polled by Bloomberg had estimated around 270,000 jobs were created last month.

Payroll gains for April and May were revised down by a total of 74,000, pointing to a slightly weaker-than-expected labor market.

As a result, job growth moderated to a still-robust average of 383,000 jobs per month in the spring, down from around 600,000 in the previous three months, as the country moved closer to recovering from 22 million jobs. jobs lost during the pandemic. It has now recovered 21.5 million, or 97.6%, and could recover the rest in the next two months.

In June, professional and business services will lead job gains with 74,000. Leisure and hospitality, which includes restaurants and bars, the sector hardest hit by COVID-19, added 67,000 ; health care, 57,000; transportation and warehousing, 36,000; and manufacturing, 29,000.

Employers are still grappling with widespread worker shortages as the country continues to recover from the pandemic.

Many Americans have returned to a buoyant job market this year, but others are still caring for children, fearing COVID, changing careers, or living off federal stimulus checks or other aid. Last month, the number of people working or looking for work fell by 353,000, possibly in part due to lingering waves of COVID. This pushed the labor force participation rate down from 62.3% to 62.2%, still well below the pre-COVID level of 63.4%.

For now, the economy remains on solid footing as it continues to benefit from a recovery in travel and other activities and massive household savings accumulated during the health crisis.

But inflation hit a 40-year high of 8.6% in May amid ongoing supply chain problems and Russia’s war in Ukraine. According to economist Lydia Boussour of Oxford Economics, the sharp rise in prices is squeezing corporate profit margins, leading many to scale back their hiring plans.

Consumers also cut back as costs rise. Activity in the manufacturing and services sector is progressing more slowly. And initial jobless claims, an indicator of layoffs, have risen in recent months, although they are still historically low.

The Federal Reserve is making the pain worse, at least in the short term, by aggressively raising interest rates to limit soaring inflation.

By the end of the year, Moody’s Analytics estimates, average monthly job gains will slow to just over 100,000. Although top economists believe the nation can dodge a recession, they have significantly raised the odds of a recession over the next 12 months, a scenario that would likely mean net monthly job losses for the United States.

While the economy has likely contracted for a second consecutive quarter in the past three months – historically an informal benchmark for recession – top analysts say it will likely take a drop in employment to push the country into a slowdown.

In June, U.S. employers announced about 32,000 job cuts, down from about 20,000 in May and June 2021, according to outplacement firm Challenger Gray & Christmas. And the bleaker outlook is prompting some companies to hold back on hiring.

CompanyFolders.com – which makes folders, binders and other business marketing materials – recently dropped plans to hire a marketing manager, business analyst and project manager, CEO Vladimir Gendelman said.

Sales for the Pontiac-Michigan-based company are up 20% from a year ago, he says. But he adds, “I don’t want to hire people and then have to let them go.”

Felix Media Solutions, which provides audiovisual equipment to businesses, had planned to bring in about nine technicians to handle a 25% increase in revenue, but will instead rely on contractors, said Lionel Felix, CEO of the company based in Austin, Texas.

“We’re very busy, but with all the recession news, we’re waiting for the bad news,” Felix says. “We’re all a little shy and don’t want to have to fire people.”

Other companies see the layoffs and reduced hiring plans as an opportunity to recruit workers who have been in short supply during the pandemic.

San Diego-based IDMerit, which provides online identity verification services, recently tripled to 13 the number of technology, customer service and product management employees it plans to hire.

“What if the economy doesn’t really slow down?” asks CEO Tony Raval. “I want to take advantage of this situation…and hire good resources now.”

The labor market also faced temporary headwinds in June. Restaurants, hotels and amusement parks have hired hundreds of thousands of workers over the same period over the past two years as businesses recover from the fallout from COVID. That likely reduced this year’s gains after seasonal adjustments, Goldman Sachs says.

And many restaurants and other frontline workers have recently been idled by waves of COVID, a development that may have dampened job gains, says Diane Swonk, chief economist at Grant Thornton.

The strong report could help convince the Federal Reserve to raise its key interest rate by three-quarters of a percentage point for a second consecutive month at the end of July to reduce inflation instead of the half-point hike. expected, says economist Andrew Hunter. capital saving.

The average hourly wage increased by 10 cents, further reducing the annual increase from 5.2% to 5.1% and providing another sign of slowing inflation as well as lower commodity prices . But that’s still too high for the Fed, which is likely to go ahead with big rate hikes, says Hunter.

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