June jobs report shows strength of labor market, but is it enough to quell inflation fears?

The latest jobs report from the U.S. Bureau of Labor Statistics revealed that, despite ongoing fears about the state of the economy, nonfarm employers across the country added 372,000 new jobs in June, exceeding economist expectations as the labor market continued to roll.

It marked the fourth consecutive month with more than 350,000 added jobs and handily surpassed the 268,000 jobs predicted by a Reuters poll of experts. Even with revisions that pulled total additions for the last two months down by 74,000, June’s strong report leaves payrolls at just 0.3% below their pre-COVID figure in February 2020. Private sector employment has now in fact recovered all of its job losses from the pandemic and some, with June’s additions putting it 140,000 jobs above its February 2020 level.

Nearly every major sector added jobs, led by professional and business services, which posted an uptick of 74,000. Leisure and hospitality added 67,000 jobs, continuing to rebound as Americans return to travel and in-person services. Healthcare (which added 57,000 jobs), transportation/warehousing (36,000 jobs) and manufacturing (29,000) also saw strong growth in June.

Meanwhile, the unemployment rate held steady at 3.6%, while the number of people working part-time for economic reasons declined by 707,000 to 3.6 million, lowest in almost 21 years. The strong report bolsters the Federal Reserve’s case for another interest hike of 75 basis points when it meets later this month, and while the robust job numbers certainly don’t quell ongoing recession fears, they do have observers pondering how different any upcoming slump might look to previous times the economy has stagnated.

“Better than expected June jobs report gives hope for the likelihood of a ‘soft landing’ and a ‘jobful’ downturn, which may or may not be a ‘recession,’” said Mark Fleming, chief economist at First American Financial Corp.

“Job openings slid from their peak and employers are trying to hang on to the employees they have. The layoff rate in May remained near historic lows. Still lots of excess labor demand to work through. Could this be a ‘jobful’ downturn? And can we even call a ‘jobful’ downturn a recession? It’s more than just GDP and/or the labor market.”


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