Hiring cools as employers added 209,000 jobs in June
Hiring cooled in June as employers put the brakes on hiring amid economic headwinds such as surging borrowing costs.
The U.S. added 209,000 jobs last month, the Labor Department reported Friday. That was in line with economists' expectations for about 205,000 new jobs in June, according to a poll of economists by FactSet.
By comparison, employers added 339,000 new jobs in May, although the Labor Department on Friday revised that number downward to 306,000.
The Federal Reserve has sharply boosted interest rates over the past year, making it more expensive for businesses to expand. The central bank wants to tamp economic growth to slow inflation, which hit a 40-year high last year. The latest jobs data signals that businesses are continuing to hire, albeit at a cooler pace, easing fears of a brewing recession while also providing evidence to the central bank that its rate hikes are working as intended.
"The U.S. labor market moderated in June, as new job creation edged down — a step toward the much sought-after soft landing in the economy," noted Dave Gilbertson, labor economist at payroll management software company UKG, in an email after the numbers were released. "[T]he labor market is holding up very well, but it's not on fire."
The unemployment rate edged down to 3.6% from 3.7% in the prior month.
June's hiring pace was below the average rate of the first six months of 2023, with 278,000 jobs created on a monthly average during that time. It also marks a slowdown from the average monthly job creation rate of 399,000 in 2022, the U.S. Bureau of Labor Statistics said.
Jobs were added in government, health care, social assistance and the construction industries, while some sectors saw little change in hiring, including professional and business services and leisure and hospitality.
Still, the weaker jobs report may not be enough to stop the Fed from hiking rates later in July, especially as wage growth remains strong, according to Capital Economics.
"With the annual rate of wage growth unchanged at 4.4%, that is still too strong to be consistent with 2% inflation and suggests a further easing in labour market conditions is still needed," wrote Capital Economics' deputy chief U.S. economist Andrew Hunter in a Friday morning research note.