July 8, 2022 - NPR
Scott Horsley
Hiring slowed only slightly last month, and the U.S. job market remains resilient despite high inflation and waning economic growth.
The Labor Department said Friday that employers added 372,000 jobs in June. The unemployment rate held steady at 3.6%, while the labor force shrank by 353,000 people.
Job gains have slowed since the first third of the year, when employers were adding nearly 500,000 jobs per month on average. But economists say a slowdown isn't surprising, now that the U.S. has replaced most of the jobs lost during the pandemic downturn two years ago. Employment at private-sector businesses is higher now than it was in February of 2020, while government employment still lags.
"It shouldn't be seen as a terrible thing or as a huge slowdown or an impending recession," said Julia Pollak, chief economist for the job-search website ZipRecruiter. She noted that hiring is still significantly stronger than in 2019, when employers were adding an average of 164,000 jobs each month.
Some industries saw more of a slowdown than others in June. Construction companies added just 13,000 jobs during the month ・less than half as many as the month before ・as homebuilding has declined in response to rising mortgage rates.
The leisure and hospitality sector, which includes restaurants and hotels, added 67,000 jobs, as it continues to rebound from a deep slump early in the pandemic.
"There's a lot of people out there traveling, going out to eat. So there's still a lot of demand for those workers," said senior economist Sarah House of Wells Fargo.
The mix of job gains also reflects shifts in consumer behavior. For much of the past two years, Americans spent freely on home furnishings and other goods, boosting employment at warehouses and transportation companies. House expects those gains to cool, now that people are spending more money on services such as airfare and concert tickets.
"There's been a pullback in goods spending," she said. "I think there are some areas that are ripe for weaker job growth."
Warehouses and transportation companies added 36,000 jobs in June, down from 59,000 the month before.
The Federal Reserve is deliberately tapping the brakes on the economy, in an effort to curb inflation, which is the highest it's been in four decades. The central bank raised interest rates by 0.75 percentage points in June. Another similar-sized rate hike is expected later this month.
While the Fed is not trying to prompt layoffs, it would welcome some cooling of what has been a red-hot job market.
"Even if you see a slowdown in job growth, if it's also accompanied by some of those wage pressures coming off, I think the Fed can live with that," House said.
Average wages in June were 5.1% higher than a year ago. That's down slightly from 5.2% for the 12 months ending in May.
A growing number of economists worry that inflation has now climbed so high that the Fed will need to crack down hard to get prices under control, which could tip the economy into recession. In recent weeks that fear has led to considerable volatility in the stock market.
While last month's job gains hardly point to an economic downturn, there are some signs that both employers and workers are becoming more cautious. Job postings at the beginning of June were down slightly from the previous month.
The number of workers quitting jobs voluntarily also declined. A recent survey by ZipRecruiter found a drop in the number of workers who believe jobs will be more plentiful six months from now.
"They are still doing well in their current job searches, with many having multiple offers to choose from," said Pollak. "Yet they see all the headlines about a possible recession, and that's making them nervous about the future."
