U.S. unemployment growth slowed in June, but artificial growth remained firm and the unemployment rate declined. That easing momentum is strong enough for the Federal Reserve to raise interest rates later this month to fight inflation.
Data released by the U.S. Labor Department on Friday showed that the number of non-farm workers added to the payroll in June was a solid 209,000, but well below the 306,000 created in May and the slowest monthly increase since December 2020. Dow Jones estimates 240,000 nonfarm workers were added in the month.
In the first half of this year, the number of non-farm workers on the payroll increased by an average of 278,000 a month, down from nearly 400,000 a month last year.
The unemployment rate fell to 3.6 per cent in June from 3.7 per cent in May, in line with expectations. In order to win over a limited number of workers, shopkeepers have improved their manpower. Average hourly earnings rose 4.4 per cent in June from a year earlier, unchanged from the previous two months but still well above pre-COVID-19 levels.
Bill Adams, chief economist at Comerica Bank, said that in the Fed’s view, the market for artificially strong easing remains very tight and could add to inflationary pressures.
The latest unemployment and labor data provided further confirmation that the economy is not slowing as much as Fed officials had expected, leaving them on track to raise interest rates again at their July 25-26 meeting, taking them to their highest level in 22 years.
Andrew Hunter, deputy chief US economist at Capital Economics, said the June statement had finally seen a more pronounced slowdown in the rest market, but this was unlikely to stop the Fed from raising interest rates again later this month. Especially if the artificial downward trend seems to have come to a halt.
Having opted to stay on hold in June, Fed officials have previously shown they are in a good position to raise rates at their July meeting amid signs of recent strong economic growth and persistent price pressures.
The market widely expects the Fed to raise the target range for the federal funds rate by 25 basis points to 5.25% to 5.5% in July. That estimate barely budged before and after the unemployment data. Traders are now pricing in a 92.4 percent chance that the Fed will raise rates at its July meeting.
In terms of specific industries, the authorities added 60,000 new posts in June, almost all of them at the state and local levels. The conditioning industry added 41,000, while the social support and construction industries added 24,000 and 23,000, respectively.
The leisure and hospitality industry, the strongest engine of job growth in the past three years, added just 21,000 jobs in June. The sector has cooled sharply, with modest gains over the past three months. In addition, the retail industry added 11,000 kiosks, and the shipping and storage industry added 7,000.
Mengrest force mall expanded support, this year’s economic movement reflects dull. Workers who got more to spend spent more on sightseeing, eating out and ball games. Others bought new cars. The economy grew at an annualized rate of 2% in the first quarter, and many economists expect a similar increase in the second quarter.
Still, there are some signs that the rest market is cooling. The number of people disposing of part-time jobs because they could not find full-time rest rose by nearly half a million in June. The Labor Department said more workers reported having their shutdowns extended because of slowing trade conditions.
The rest force participation rate, the ratio of economically active (unemployed and unemployed) to rest age, stood at 62.6% for the fourth consecutive month, well below the pre-pandemic level of 63.3% in February 2020. Much of this reflects America’s aging population and the resulting lack of continuous rest.
In other data, initial claims for unemployment benefits are up about 20 percent from the beginning of the year. Tech giants, including Facebook’s parent Meta, Google’s parent Alphabet and Microsoft, all laid off workers earlier this year. Other sectors of the economy, such as retailers, manufacturers, media companies and financial firms, have also announced spending cuts.