The US economy added far more jobs than expected in June and wages rose, according to government data released Friday which could fuel fears about accelerating inflation.
There were 372,000 new positions added in the month, nearly 100,000 more than economists forecast, and the unemployment rate held steady at 3.6 percent, the Labor Department reported.
Average hourly earnings rose to cement a 5.1 percent increase over the past 12 months, the report said, while the share of adults in the labor force was little changed.
The data will provide little comfort to the Federal Reserve, which has declared war on inflation that has risen at the fastest rate in more than 40 years. The central bank has implemented aggressive interest rate hikes to try to cool demand.
Atlanta Federal Reserve Bank President Raphael Bostic said the strong labor market is a good thing, but he stressed that he is “fully supportive” of another super-sized increase in the benchmark borrowing rate later this month, matching the three-quarter percentage point hike in June.
“We’re starting to see those first signs of slowdown, which is what we need because what we have right now is a great imbalance between supply and demand that’s driving the inflation,” Bostic said on CNBC.
That imbalance will have to come into alignment “if we’re going to get that inflation under control.”
There are growing fears that the Fed’s efforts to tamp down price pressures will push the world’s largest economy into recession.
Fed Chair Jerome Powell has argued that the strong US job market means the economy is well-positioned to withstand the rapid ramp up in borrowing rates, although he and other policymakers acknowledge the process may inflict some pain.
The economy gained 2.74 million jobs in the first half of the year, which is more than most full years dating back to 2000.
– ‘Fanciful’ recession fears –
Total nonfarm employment remains just slightly below the pre-pandemic level in February 2020, but the private sector has recovered and is 140,000 higher than it was before Covid-19 hit, according to the report.
Big gains in the month came in the health care and leisure and hospitality sectors, while retail rebounded after a big decline in May, the data showed. Manufacturing added 29,000 positions.
“June’s strong job growth, especially in the teeth of high inflation, shows that the expansion remains on solid ground,” said Robert Frick, corporate economist with Navy Federal Credit Union.
Strong consumer demand has anchored the post-pandemic recovery and defied expectations of a slowdown, but economists still believe job creation will start to slow.
Ian Shepherdson of Pantheon Macroeconomics said the recent data “usually would be consistent with a raging economic boom,” but the gains last month are “much more about post-Covid catch-up hiring.”
Still, he said, “the jobs data support our view that talk of the economy being in recession right now is fanciful.”
