“This is not as strong of a jobs report as we’ve had expected, but it’s representative of a labor market that is healthy and improving,” said Adam Ozimek, chief economist at Economic Innovation Group. “We’ve had millions of people return to the labor market [over the past year] and seen inflationary pressures fall without creating any job loss whatsoever.”
Fueling the payroll gains was the government sector, which added 60,000 jobs in June, but still remains below its pre-pandemic levels. Health care, a centerpiece of pandemic recovery economy gains, added 41,000 jobs, driven by increases in hospitals, nursing facilities and home health services. Construction also saw strong gains, adding 23,000 jobs, despite rising interest rates that have made buying homes more expensive.
The moderate job gains, combined with wage growth, will probably lead the Federal Reserve to resume interest rate hikes this month. The central bank has raised borrowing costs 10 times since last year, but held them steady in June.
Average hourly earnings accelerated last month, rising by 4.4 percent over the year, to $33.58 an hour. Fed policymakers are closely monitoring wage growth, because they worry that fast-rising wages will hamper their ability to bring down inflation, at 4 percent last month.
Financial markets bristled at the prospect of higher interest rates, even though the job gains were smaller than anticipated. All three major stock indexes — the Dow Jones Industrial Average, Standard & Poor’s 500 and Nasdaq — slipped about 0.1 percent in the first minutes of trading Friday.
The hardy job market, despite cooling, has helped prop up the broader economy, even as the Fed has taken aggressive action to slow things down. Despite higher borrowing costs, which have weakened major sectors including housing and manufacturing, employers are still adding jobs at a brisk pace. Layoffs remain low, and workers are getting raises.
As long as Americans remain employed, they’ve been able to keep spending, even in the face of persistent inflation.
Bloomberg Economics, which last fall forecast a 100 percent chance of a recession by October, now says the country will “narrowly dodge” a downturn this year. Major banks including Goldman Sachs and Barclay’s are watering down recession predictions, in large part because of the job market’s resilience.
“As long as the economy continues to produce more than 200,000 jobs a month, this economy is not going to slip into recession,” Joe Brusuelas, chief economist at RSM, wrote in a research note.
A rapidly aging population created a backlog of demand for health-care services, exacerbating the need for workers in that sector. The industry is expected to expand more than any other sector over the next decade.
Mark Helm, a pediatrician in Silverton, Ore., is preparing to open a second office. But so far, he says, the toughest part has been securing enough doctors, medical assistants and receptionists, who are all in high demand.
“We’re in expansion mode here — we see an opportunity to grow,” he said. “But finding the right employees and getting them trained, that’s gotten much harder, even harder than before.”
Helm opened Small Town Pediatrics in late 2021 and has three employees, all of whom were hired within the last three months. Even though demand for workers throughout the economy has cooled — job openings nationwide decreased in May — he says it’s gotten tougher to attract applicants, because people aren’t as keen on switching jobs as they were at the height of the Great Resignation.
“People have a mentality of staying where they are, and employers who have good employees want to do all they can to keep them,” he said. “We put out advertisements but don’t get an awful lot of interest.”
But other industries have continued their gradual slowdown. Retail, transportation and warehousing, manufacturing, and the information sector all lost jobs or saw little growth in June.
Meanwhile, the Black unemployment rate, which had reached a record low in April at 4.7 percent, rose in May and June again, to 6 percent. A wide body of research shows that Black workers are the first to lose their jobs in economic downturns.
Still, many workers have continued to use their leverage to switch jobs and find better opportunities.
After 20 years working in auto dealerships, Darren White quit his job and got hired this spring as a ramp assistant at San Francisco International Airport, directing incoming flights to their gates and loading and unloading luggage for passengers.
White, 54, says he makes roughly the same income as he did at the auto-dealership, about $20 an hour. But he pays much less out of pocket for union retirement and health-care benefits that he says will provide him security for many years to come. Plus, he can fulfill his dreams of traveling to New York City and Hawaii through the airlines’ free flight perk.
“I said to myself, ‘This is a time in my life that I want to have great benefits, do something different and plan for retirement,’ ” White said. “This job is perfect for me.”