Job Growth Slowed in June but Remains Healthy
The labor market continues to be resilient. There are signs that the unprecedented growth over the last three years is gradually leveling off, but the market still shows strength. The U.S. economy added more jobs in June than expected. Still, the gains were narrow, primarily across a few sectors, including health care and social assistance, government and construction. Several sectors saw employment shrink, including manufacturing, retail trade and professional and business services. Yet, the market is strong, and rising unemployment with slowing wage growth should help bring inflation under control without tipping the economy into recession. The June jobs report could pressure the Fed to cut interest rates finally.
The U.S. economy added a far-better-than-expected 272,000 jobs in May, while the unemployment rate edged up to 4%, its highest level in more than two years. The labor market remains strong, with good news in terms of growth and participation. It continues to fuel the economy and support workers. At the same time, the report has some concerning, underlying numbers to watch, such as the unemployment rate, wage growth, part-time employment rate and the number of discouraged workers leaving the workforce.
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April Jobs Market: Hiring Remains Firm with Signs of Slowing.
The increase in average hourly earnings is below estimates and is a promising sign for inflation. A softer than expected U.S. jobs report fueled hopes that the Federal Reserve could start cutting rates soon. Some economists predict a decrease as early as July or September.
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The labor market continues to impress with the 40th straight month of job growth and an unemployment rate that ticked lower. Job gains in Q1 2024 averaged 276,000 per month, compared to the Q4 2023 average of 212,000 jobs added each month. The jobless rate fell as more people entered the workforce. Gains were broad-based. Wages, an important inflation metric, increased slightly, up 0.3% to 4.1% year-over-year (YOY). It was the lowest annual gain since June 2021.
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