The US economy added far more jobs than expected in June and wages rose, according to government data released on Friday, which could fuel fears of accelerating inflation.
This month, 372,000 new jobs were created, nearly 100,000 more than economists had forecast, and the unemployment rate held steady at 3.6 percent, the Labor Department reported.
Average hourly earnings rose 5.1 percent over the past 12 months, the report says, while the adult share of the labor force has changed little.
The data will offer little comfort to the Federal Reserve, which has declared war on inflation, which has risen at its fastest pace in over 40 years. The central bank has aggressively hiked interest rates to try to dampen demand.
Atlanta Federal Reserve Bank President Raphael Bostic said the strong job market is a good thing, but stressed that he “fully supports” another outsized interest rate hike later this month, that of the three-hike Quarter percentage points corresponds to June.
“We’re starting to see these early signs of a slowdown, which is what we need because what we have right now is a huge supply-demand imbalance that’s driving inflation,” Bostic said on CNBC.
This imbalance needs to be corrected “if we are to get inflation under control”.
Fears are growing that the Fed’s efforts to contain price pressures will push the world’s largest economy into recession.
Fed Chair Jerome Powell has argued that the strong US jobs market means the economy is well-positioned to withstand the rapid rise in lending rates, although he and other policymakers acknowledge the process could cause some pain.
The economy added 2.74 million jobs in the first half, more than in most full years since 2000.
– “Imaginative” recession fears –
Total non-farm employment in February 2020 remains only slightly below pre-pandemic levels, but the private sector has recovered and is 140,000 higher than before the Covid-19 outbreak, according to the report.
The healthcare, leisure and hospitality sectors posted big gains this month, while retail trade recovered after a sharp decline in May, data showed. Manufacturing added 29,000 jobs.
“Strong job growth in June, especially given high inflation, shows the expansion remains on solid footing,” said Robert Frick, business economist at 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 slow.
Pantheon Macroeconomics’ Ian Shepherdson said the latest data would “usually coincide with a raging economic boom” but last month’s gains were “much more to do with post-Covid catching-up hiring”.
Still, he said: “The employment data supports our view that talking about the economy being in recession right now is fanciful.”
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