Posted on: July 11, 2022 Posted by: AKDSEO Comments: 0
The unemployment rate last month remained unchanged at 3.6 percent. (Matt Rourke/Associated Press)

A new federal jobs report released Friday showed the U.S. labor market maintained its torrid pace in June, even as the Federal Reserve raised interest rates and worries of a hiring slowdown or a possible recession grew.

But with inflation spiking and other indicators more mixed, the new data leaves a confusing picture of what, exactly, the economy is doing and what policymakers, businesses and consumers should do to prepare for the future.

Employers added 372,000 new positions last month, the Bureau of Labor Statistics reported, with gains across a range of industries and private-sector employment recovering all of its pandemic losses. The unemployment rate, meanwhile, remained steady at 3.6 percent for a fourth straight month.

“The U.S. labor market is defying gravity,” said Becky Frankiewicz, chief commercial officer for the staffing firm Manpower Group. “Fears of a possible recession stoked by inflation and an aggressive Fed are eclipsed by the simple reality that employers can’t hire fast enough to meet demand.”

The strong job growth keeps pressure on the Fed to continue raising interest rates when it meets later this month. After years of keeping interest rates at or near zero, the central bank has so far hiked rates three times this year, by a total of 1.5 percentage points, in the hope of slowing the economy just enough to curb inflation, which is at 40-year highs, without pushing it into a deep recession.

Fears of a more serious slowdown in the world’s largest economy are rising, despite the impressive job gains. Consumer confidence has plunged to record lows, in part because inflation is so high, and the stock market has lost trillions of dollars worth of value this year. (The stock market was mixed on Friday.)

Recession-spotters have pointed to technology industry layoffs, falling commodity prices and real-time measures of economic performance that showed output shrinking as proof that the United States was mired in its second downturn in three years.

The Federal Reserve Bank of Atlanta, for instance, estimated that the economy shrank by 1.2 percent in the second quarter, which would technically put the United States in a recession by one common definition, since the first quarter also saw a contraction.

But the National Bureau of Economic Research, the nonprofit organization that is the official arbiter of recessions, considers a number of other factors, such as the unemployment rate, before proclaiming a downturn is underway.

“The labor market continues to tighten,” said Eric Winograd, director of developed market economic research for Alliance Bernstein in New York. “Unless or until that changes, the economy will not be in recession, no matter what GDP prints say.”

President Biden on Friday took credit for the rapid labor market turnaround, saying it was the result of widespread stimulus efforts to revive the economy. The recovery from the brief pandemic recession in early 2020 has been much faster than the recovery from the Great Recession after the 2008 financial crisis.

“Today, we learned that our private sector has recovered all of the jobs lost during the pandemic, and added jobs on top of that,” Biden said in a statement on Friday. “This has been the fastest and strongest jobs recovery in American history.”

U.S. employers are still eager to bring on new workers. Businesses continued to hire briskly in June, with some of the biggest jumps in professional and business services, which added 74,000 jobs, leisure and hospitality at 67,000 jobs and health care at 57,000 jobs.

Employers added 29,000 new factory jobs in June, bringing the total to 12.8 million, which means all of the nearly 1.4 million manufacturing jobs lost in the early months of the pandemic have been recovered. There were also notable gains in jobs producing durable goods, such as computers and motor vehicles, and in food manufacturing.

Overall, the economy is still down about 500,000 jobs from before the pandemic. Although private-sector employers have more than made up for pandemic losses, the government is still down 664,000 employees from early 2020.

“These are big, broadly distributed gains,” said Julia Pollak, a labor economist at Zip Recruiter. “There was continued strength in even the most capital-intensive and interest rate-sensitive sectors like manufacturing and construction, which suggests that the labor market is still vibrant and dynamic. It is not reacting too negatively to the return to more normal interest rates.”

What is a recession? We answered all your economy questions here.

Employment also rose across retail, transportation and warehousing, and education. Day-care centers added 11,000 workers, while nursing and residential care facilities hired 8,000 workers, promising developments that could help get more parents and caregivers back into the labor force.

“We saw strong gains in child care, which has an immediate impact on getting people back to work,” Labor Secretary Marty Walsh said in an interview. “If you have people who can’t go to work because they don’t have strong child care, and all of a sudden, centers start calling parents saying, ‘We have an opening, our wait list is moving,’ that’ll have an impact on getting people, especially more women, back to work because frankly, the jobs are available.”

In Ohio, spirits manufacturer Cleveland Whiskey recently hired two new employees, bringing its head count to 18. Despite rising costs and other economic challenges, chief executive Tom Lix says sales have largely held up so far this year.

“There has been a little bit of a flattening from last year, but consumer demand remains pretty strong,” he said. “There are a lot of factors we’re dealing with, inflation, supply shortages in terms of getting bottles and grains and everything else, but nothing obvious that says, ‘Oh my God, demand is down.’ It is still too early to tell which way things are going, but we’re keeping a very close eye on it.”

The share of people with jobs or actively looking for one fell slightly in June, to 62.2 percent of the labor force, from 62.3 percent the month before. But workers continue to reap the benefits of a tight labor market where there are nearly two open positions for every person seeking a job.

Around 4.3 million Americans quit or changed jobs in May, a sign that workers had the upper hand. Some are switching careers altogether, from hospitality to office work, for instance, in search of more consistent hours, higher wages and better working conditions.

Wages continued to rise in just about every sector, except for manufacturing and professional and business services, where they remained steady from the month before. Average hourly earnings rose 10 cents to $32.08 in June, though there are signs that growth is cooling. Overall wages are up 5.1 percent over the past year, though they have not kept pace with prices, which have increased 8.6 percent in the same period.

“Wage growth has been fairly strong, and the good news is that gains have been largest for lower-income workers,” said Liz Ann Sonders, managing director and chief investment strategist at Charles Schwab.

After nearly a decade working in restaurants, Annabel Sanderson, 29, recently took a job as a teller for a bank in New Hampshire. She went through three interviews and got an offer within a week of applying. The bank is paying her more she had asked for, amounting to a 50 percent raise, along with a hefty benefits package that includes pet insurance. She said she had grown tired of working in short-staffed restaurants.

“I didn’t expect to get a job within a week, especially since I don’t have any experience in banking,” she said. “I was shocked as heck. But it just shows you that there is still a real need for employees.”

David J. Lynch contributed to this report.