US employers hired far more workers than expected in June and continued to hike wages steadily, signs of continued strength in the labor market that give the Federal Reserve ammunition for another 75 basis point hike in interest rates this month.
The Labor Department’s closely watched employment report also showed no evidence of companies cutting hours for workers. The number of people working part-time for economic reasons also fell sharply, falling below pre-pandemic levels.
“Today’s job count should allay fears of an imminent recession, but it does nothing to ease fears of significant further Fed tightening,” said Seema Shah, chief global strategist at Principal Global Investors. “The job market remains tight.”
Non-farm payrolls rose by 372,000 jobs last month. Employment is now 524,000 jobs below where it was in February 2020.
The private sector has recovered all jobs lost during the Covid-19 pandemic and is 140k higher than February 2020, while state employment is still in the hole by 664k.
The broad surge last month was led by the professional and business services industry, which added 74,000 jobs. The number of people employed in the leisure and hospitality sector rose by 67,000 jobs. However, employment in the sector has fallen by 1.3 million since February 2020.
There have also been strong wage increases in healthcare, information, and transportation and warehousing.
The unemployment rate remained unchanged at 3.6 percent for the fourth straight month, partly as people exited the labor market.
The Fed wants to curb labor demand to bring inflation down to its 2 percent target. The US Federal Reserve’s aggressive monetary policy stance has increased fears of a recession.
In June, it raised its federal funds rate by three-quarters of a percentage point, the largest hike since 1994. Markets mostly expect the Fed, which has hiked its funds rate by 150 basis points since March, to announce a further 75 basis-point hike at its meeting later in this month.
June inflation data, due out next Wednesday, should show an acceleration in consumer prices, giving policymakers another reason to keep raising borrowing costs.
https://www.independent.ie/business/world/strong-us-jobs-growth-points-to-more-fed-tightening-41825946.html Strong US employment growth points to further Fed tightening