The economy added 372,000 jobs in June, a hotter-than-expected boost to the labor market that could ease worries of an impending recession but also complicate the job of the Federal Reserve as it seeks to quell inflation.
The unemployment rate was 3.6 percent, the same as a month earlier, the Labor Department said on Friday.
Employers have continued to compete for workers in recent months, with initial jobless claims rising only slightly from their low point in March.
However, there is no guarantee that the rapid growth will continue indefinitely, as extremely high prices weigh on consumer spending. The labor force remains limited by aging demographics, low immigration rates and barriers to work that keep many people out of work.
“We weren’t going to sustain the employment growth that we’ve seen — it had to stop,” said Julian Richers, vice president of global economic research at Morgan Stanley. He said it will take some time to satiate America’s appetite for labor, however.
“There is still a lot of pent-up demand for workers,” Dr Richers said. “It makes sense that as the economy slows, employment should also slow once we deal with the pent-up labor demand.”
That lag is evident in the 11.3 million jobs that employers posted in May, a number that remains near a record high and leaves nearly two jobs available for every job seeker. In this equation, any workers laid off as certain sectors come under strain are likely to find new jobs quickly—at least for a while.
But a number of headwinds are creating a time constraint in this seller’s market for labor. Business leaders report that while domestic demand remains strong and some supply chain issues have eased, backlogs are no longer growing and savings accounts are shrinking. Whenever possible, employers automate tasks rather than hire new employees.
“Employers are becoming less concerned about filling these job postings as they watch the economy slow,” said Bill Adams, chief economist at Comerica Bank. “I would expect that businesses will probably be slow to fill open positions before they actually pull job postings.”
There are early indications that some employers have started to lay off workers – either because demand is falling or because rising interest rates are starving them of capital.
Relocation firm Challenger, Gray & Christmas said Thursday that the number of job cuts announced in June rose 57 percent from the previous month, to the highest total since February 2021. The layoffs are concentrated in the auto industry, which has been plagued by supply shortages and high gasoline prices.
Lauren Herring, CEO of outplacement and coaching firm Impact Group, also noted an uptick in business.
“We feel like we’re at a tipping point as the number of affected employees increases over the year,” she said. But for now, it was able to quickly find new jobs for most of the laid-off workers.
“People still feel like the grass is greener and ‘I can still go across the street and get a signing bonus at XYZ Company,'” Ms. Herring said.
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