The economy added 372,000 jobs in June, a warmer-than-expected boost to the labor market that could ease concerns about an impending recession but also complicate the Federal Reserve’s job as it seeks to curb inflation.
Unemployment was 3.6 percent, the same as a month earlier, the Ministry of Labor announced on Friday.
Employers have continued to compete for workers in recent months, with initial unemployment claims rising only slightly from the low in March.
However, there is no guarantee that rapid growth will continue indefinitely, as sky-high prices weigh on consumers’ consumption. The workforce is still limited by aging demographics, low levels of immigration and barriers to work that keep many people on the sidelines.
“We did not intend to sustain employment growth as we had seen – it had to stop,” said Julian Richers, vice president of global economic research at Morgan Stanley. He said, however, that it would take a while to exhaust the US appetite for labor.
“There is still a lot of pent-up demand for workers,” said Dr. Richers. “It makes sense that when the economy slows down, employment should also decline, when we have worked our way through the backlog of labor demand.”
This lag is evident in the 11.3 million jobs that employers had opened in May, a figure that is still close to record highs, leaving almost two jobs available for every person looking for work. In that equation, all workers who are laid off as certain sectors come under pressure will most likely find new jobs quickly – at least for a while.
But a series of headwinds creates a time constraint for that seller’s labor market. Business executives report that although domestic demand remains strong and some supply chain problems have eased, order backlogs are no longer growing and savings accounts are shrinking. Whenever possible, employers automate tasks instead of hiring new employees.
“Employers are less eager to fill these job vacancies as they see the economy go down,” said Bill Adams, chief economist at Comerica Bank. “I expect companies to be slow to fill vacancies before actually pulling out job postings.”
There are early indications that some employers have begun to lose workers – either due to reduced demand or due to rising interest rates that are starving them for capital.
The outplacement company Challenger, Gray & Christmas reported on Thursday that the number of announced layoffs in June rose by 57 percent from the previous month, to the highest total since February 2021. Cuts were concentrated in the automotive industry, which has been confused with shortages of supplies and high gas prices.
Lauren Herring, CEO of the outplacement and coaching company Impact Group, has also seen an increase in the business.
“We feel we can be at a turning point, as the number of employees who have been affected has increased throughout the year,” she said. But for the moment, she has quickly been able to find new jobs for most layoffs.
“People still have the feeling that the grass is greener, and ‘I can still walk across the street and get a signing bonus from the XYZ company,'” Herring said.