The US economy added 206,000 jobs in June, signalling a slight cooling in the labour market, according to the latest data from the Bureau of Labor Statistics (BLS).
This figure aligns closely with economists’ expectations and represents a modest decline from the revised 218,000 jobs added in May.
June’s unemployment rate edged up to 4.1%, marking the first time in over two years that it has surpassed 4%. This 0.1% increase from May indicates a gradual easing in labour market conditions.
Earlier reports this week had already suggested a cooling trend. Payroll processor ADP reported that private sector employment grew by 150,000 jobs in June, down from 157,000 in May. Additionally, the executive outplacement firm Challenger, Gray & Christmas noted 48,786 job cuts in June, a reduction from May’s 63,816 but still a near 20% increase compared to June of the previous year.
The monthly jobs report, a key indicator for both Wall Street and policymakers in Washington, comes as the Biden administration faces challenges with public perception of its economic management. The labour market’s resilience has been a crucial counterpoint amid broader economic concerns.
These employment figures, alongside upcoming inflation data, will be pivotal for the Federal Reserve’s assessment of economic health and its interest rate strategy. The Fed maintained interest rates at a two-decade high of around 5.3% last month as it strives to bring inflation down to its 2% target. In May, inflation stood at 3.4%, significantly lower than its June 2022 peak of 9.1% but still above the Fed’s goal.
Minutes from the Fed’s last meeting, released on Wednesday, indicated a cautious approach, with officials awaiting “additional favourable data” before considering rate cuts. Fed Chair Jerome Powell remarked earlier this week on the progress made towards balancing the labour market, emphasising the need for confidence in sustainable inflation reduction.
The forthcoming inflation report for June, due on 11 July, and the Fed’s next meeting on 30 and 31 July, will be critical in shaping future monetary policy decisions.
