In June, America's employers added 206,000 jobs, showcasing the U.S. economy's ability to withstand high interest rates. While this number was slightly lower than May's job growth of 218,000, it still reflected the resilience of the consumer-driven economy, which continues to grow steadily.
However, there were signs of a slowing job market in the latest report from the Labor Department. The unemployment rate increased from 4% to 4.1%, the highest rate since November 2021, as more people entered the job market without immediately finding employment. Additionally, the government revised down its estimates of job growth for April and May by a combined 111,000.
Average hourly pay rose 0.3% from May and 3.9% from June 2023, the smallest year-over-year increase since June 2021. This modest rise in wages may be welcomed by the Federal Reserve in its efforts to combat inflation. Most economists anticipate the Fed will begin cutting its benchmark rate in September, and the details in the recent jobs report align with this expectation.
While job growth in certain sectors, such as government and healthcare, accounted for a significant portion of June's job gains, economists noted a three-month average of 177,000 new jobs from April through June, the lowest average since January 2021. Despite the slowdown, many economists believe the labor market remains strong and resilient.
The state of the economy and job market has become a focal point in the upcoming presidential campaign, with Americans expressing concerns about high prices and assigning blame to President Joe Biden. The Federal Reserve's series of rate hikes aimed at controlling inflation have impacted economic growth, with GDP growing at a slow pace and consumer spending declining.
Overall, while the job market may be showing signs of deceleration, it remains stable and resilient. Workers are experiencing job security, although there is still pressure to increase wages in light of rising costs of living. The Federal Reserve continues to monitor economic indicators to determine the best course of action moving forward.