US Job Growth Still Strong Amid Economic Woes

Employment growth in the United States exceeded expectations in June, with additional 372,000 jobs in the country, while the unemployment rate stayed at 3.6%, the Bureau of Labor Statistics disclosed on Friday.

Wage increases -- a key metric for observers of inflation focused on consumer demand -- rose 0.3% over last month and 5.1% over the past year. According to ABC News, those measures are almost unchanged from the report released a month prior.

The new data arrives at a precarious moment. Across the economy, acute financial distress could grow as the Fed pursues a series of rate hikes that aim to dial back sky-high inflation but risks tipping the economy into a recession. Last month, the Fed raised its benchmark interest rate by 0.75%, its most heightened rate increase since 1994.

Despite the Federal Reserve's aggressive hikes in borrowing costs, the numbers indicate moderately weaker yet strong job growth.

Several Industries Indicated Job Growth

With 67,000 new jobs, the leisure and hospitality sector sustained its robust growth. However, this was a slight drop from the previous month's gain in employment. Health care, professional services, and business services all saw job growth.

The percentage of working-age Americans who are employed or actively seeking a job, known as the labor force participation rate, decreased slightly to 62.2 %, indicating that workers are still watching from the sidelines. The number represents 1.2 percentage points below pre-pandemic values from February 2020.

The Fed targets to downsize labor demand to help keep inflation at its goal level of 2%. Recession concerns have increased due to the US central bank's tough monetary policy stance, per Reuters. These concerns were further fueled by May's modest increase in consumer spending and the weakness of home construction, building permits, and factory output.

The largest increase since 1994, it increased its benchmark overnight interest rate by three-quarters of a percentage point in June. Markets anticipate the Fed's announcement of another 75-basis-point increase at its meeting later this month. Since March, it has lifted its policy rate by 150 basis points.

Companies and Employees Now Careful

The release of June's inflation statistics, which is anticipated to indicate a rise in consumer prices, on Wednesday is seen as offering authorities even more justification for raising borrowing costs.

Employers may continue to raise pay to keep and recruit workers, resulting in elevated inflation, as per a report from NPR. At the end of May, there were 11.3 million available positions, providing 1.9 jobs for each unemployed individual.

While last month's job gains hardly point to an economic downturn, there are some signs that both employers and workers are becoming more cautious. Job postings at the beginning of June were down slightly from the previous month.

Additionally, fewer employees left their employment voluntarily. According to a new ZipRecruiter survey, fewer workers currently think more jobs will be available in six months.

Julia Pollak, the chief economist for the job-search website, said that workers "are still doing well in their current job searches, with many having multiple offers to choose from. Yet they see all the headlines about a possible recession, and that's making them nervous about the future."