US job gains slowed in June and unemployment ticked up, signaling a steady cooling of the economy as policymakers had hoped, and presenting new challenges for President Joe Biden as he seeks reelection.
US job gains slowed in June while unemployment rose, according to government data released Friday, indicating a steady cooling of the world's largest economy as policymakers hoped.
Although wage growth decelerated, it still outpaced consumer inflation. However, this has not translated into positive sentiment about the broader economy, adding to President Joe Biden’s challenges as he seeks reelection.
“We have more work to do, but wages are growing faster than prices and more Americans are joining the workforce,” Biden emphasized in a statement following the report.
The Labor Department reported that the country added 206,000 jobs last month, a slower pace compared to May’s revised figure of 218,000. Despite this slowdown, the gains surpassed a Briefing.com consensus estimate of 185,000, indicating that the labor market remains relatively resilient despite high interest rates.
The jobless rate inched up from 4.0 percent to 4.1 percent.
Currently, the figures suggest a “very gradual, orderly cooling” in the labor market, according to ZipRecruiter chief economist Julia Pollak. However, she noted signs of weakness, including downward revisions to April and May hiring numbers by a cumulative 111,000.
The slight rise in unemployment, although narrow, marks the highest level since November 2021, ending a 30-month period where the rate remained at or below 4.0 percent.
'Slowing' market
More than one-third of overall job gains came from government employment, highlighted Mike Fratantoni, chief economist at the Mortgage Bankers Association. This suggests that the headline numbers do not fully reflect the labor market’s health.
“Other aspects of the data indicate a slowing job market,” he said in a note.
Temporary hires decreased by 49,000, indicating a drop in business demand for labor, according to Fratantoni.
Wage growth slowed from 0.4 percent in May to 0.3 percent in June. Compared to a year ago, wages increased by 3.9 percent, also easing from previous figures.
“Weakening demand for labor will lead to further moderation in wage growth,” said economist Nancy Vanden Houten of Oxford Economics.
However, this is likely to strengthen the Federal Reserve’s confidence that inflation is on a downward path towards policymakers’ two percent target.
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