US labor market stays strong, adding 372,000 jobs

(CN) — The U.S. economy added 372,000 jobs in June, a sign that employers are so far unfazed by fears of a looming recession.

The better-than-expected growth kept the unemployment rate at a low 3.6% last month, according to a Labor Department report released Friday morning.

“The strong 372,000 gain in non-farm payrolls in June appears to make a mockery of claims the economy is heading into, let alone already in, a recession,” said Andrew Hunter, senior U.S. economist at Capital Economics.

The number of new positions last month is only slightly below the revised 384,000 jobs added in May and well above the Dow Jones estimate of 250,000.  

The American economy is now just 524,000 jobs short of its pre-pandemic level in February 2020. Private sector employment as a whole has fully recovered and is 140,000 above February 2020, but the government is down 664,000 positions.

Despite the strong labor market, many economists are expecting a global recession in early 2023 as inflation remains stubbornly high and the Federal Reserve raises interest rates to combat it.

Hunter said the robust payroll gains in June might be enough for the Fed to issue another rate hike at its meeting later this month, but added that “signs that wage growth is cooling and the recent plunge in commodity prices both suggest the inflation outlook could improve more quickly than officials had feared.”

Nick Bunker, economist research director at Indeed Hiring Lab, said Friday’s jobs report contains no signs that the U.S. is in an economic downturn.

“You can put away your recession alarm bells. The U.S. labor market is still very strong. Job growth continues to be robust and joblessness remains low,” Bunker wrote.

Professional and business services led the way in hiring last month, adding 74,000 positions. The industry has seen strong growth over the last two years and is 884,000 jobs above its pre-pandemic level.

Leisure and hospitality, the sector hit hardest by Covid-19 lockdowns, added 67,000 jobs but it is still down by 1.3 million since February 2020. Food and drinking establishments accounted for most of the growth last month, with 41,000 new positions.

June also saw notable gains in health care (57,000), transportation and warehousing (36,000) and manufacturing (25,000), while employment levels mostly stayed the same in retail, construction and the public sector.

Wages were also up last month. Average hourly pay now stands at $32.08, which is 5.1% higher than the same time last year.

“The labor market still has momentum,” Bunker said. “That’s not to say that this report is flawless or that no threats loom for the labor market. For now, employers continue to hire a considerable number of workers at higher wages. That’s something to celebrate.”

President Joe Biden wasted no time celebrating, saying in a statement Friday morning that he has presided over “the fastest and strongest jobs recovery in American history.”

“We have more Americans working in the private sector today than any day during Donald Trump’s presidency – more people than any time in our history,” he said.  

Biden also made the case that no country is in a better position than the U.S. to bring down inflation.

“The historic strength of our job market is one reason our economy is uniquely well positioned to tackle a range of global economic challenges – from global inflation to the economic fallout from Putin’s war,” he said.

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