Employers Add a Solid 206,000 Jobs in June, Displaying Economy’s Ability To Withstand High Interest Rates

Friday’s report from the Labor Department also shows that the unemployment rate ticked up to 4.1 percent from 4 percent.

AP/Nam Y. Huh
A hiring sign is displayed at a restaurant at Prospect Heights, Illinois April 4, 2023. AP/Nam Y. Huh

WASHINGTON — America’s employers delivered another healthy month of hiring in June, adding 206,000 jobs and once again displaying the economy’s ability to withstand continually high interest rates.

If June’s job growth marked a pullback from 218,000 in May, it was a strong gain nonetheless, reflecting the resilience of America’s consumer-driven economy, which is slowing but still growing steadily.

Friday’s report from the Labor Department also showed that the unemployment rate ticked up to a still-low 4.1 percent from 4 percent. And the department sharply revised down its estimate of job growth for April and May by a combined 111,000.

The state of the economy is weighing heavily on voters’ minds as the presidential campaign intensifies. Despite consistent hiring, relatively few layoffs and gradually cooling inflation, many Americans have been exasperated by still-high prices and assign blame to President Biden.

Economists been repeatedly predicting that the job market would lose momentum in the face of high interest rates engineered by the Fed, only to see the hiring gains show unexpected strength.

Still, there are signs of an economic slowdown in the face of the Federal Reserve’s series of interest rate hikes. The gross domestic product — the total output of goods and services — grew at a lethargic annual pace of 1.4 percent in the first three months of the year, the slowest quarterly pace in nearly two years.

Consumer spending, which accounts for about 70 percent of all American economic activity and which has powered the expansion the past three years, rose at just a 1.5 percent pace last quarter after growing more than 3 percent in each of the previous two quarters.

In addition, the number of advertised job openings has declined steadily since peaking at a record 12.2 million in March 2022.

Still, while employers might not be hiring so aggressively after having struggled to fill jobs the past two years, they aren’t cutting many, either. Most employees are enjoying an unusual level of job security.

During 2022 and 2023, the Fed raised its benchmark interest rate 11 times to try to conquer the worst streak of inflation in four decades, lifting its key rate to its highest point in 23 years.

The punishingly higher borrowing rates that resulted, for consumers and businesses, were widely expected to trigger a recession. They didn’t. The economy and the job market instead have shown surprising resilience.

Meanwhile, inflation has steadily declined from a 9.1 percent peak in 2022 to 3.3 percent. In remarks this week at a conference in Portugal, the Fed chairman, Jerome Powell, noted that price increases in America were slowing again after higher readings earlier this year.

He cautioned that further evidence of inflation moving toward the Fed’s 2 percent target level would be needed before the policymakers would cut rates.

Associated Press

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