US slowed hiring but still added a solid 209,000 jobs in June in sign of economy’s resilience

 WASHINGTON (AP) — America’s employers pulled back on hiring but still delivered another month of solid gains in June, adding 209,000 jobs, a sign that the economy’s resilience is confounding the Federal Reserve’s drive to slow growth and inflation. The latest evidence of economic strength makes it all but certain that the Fed will resume 

WASHINGTON (AP) — America’s employers pulled back on hiring but still delivered another month of solid gains in June, adding 209,000 jobs, a sign that the economy’s resilience is confounding the Federal Reserve’s drive to slow growth and inflation.

The latest evidence of economic strength makes it all but certain that the Fed will resume its interest rate hikes later this month after having ended a streak of 10 rate increases intended to slow inflation.

The June hiring figure reported by the government Friday is below the levels recorded in recent months. But it still points to a durable labor market that also features a historically high number of advertised openings. The unemployment rate fell to 3.6% from 3.7%, and is near a five-decade low.

The economy is beset by high interest rates, elevated inflation and nagging worries about a possible recession resulting from the Fed’s ever-higher interest rates. Yet many industries are still adding jobs to keep up with consumer demand and restore their workforces to pre-pandemic levels.

The solid pace of hiring and rising wages have enabled consumers to keep spending on services, from traveling to dining out to attending entertainment events. While economists have repeatedly forecast a recession for later this year or next year, a downturn is unlikely as long as companies keep steadily filling jobs.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

WASHINGTON (AP) — Another solid month of hiring in the United States is expected to be reported Friday, an outcome that would suggest no recession is near but could make it harder for the Federal Reserve to succeed in its drive to cool the economy and curb high inflation.

Employers are forecast to have added 205,000 jobs in June, according to economists surveyed by data provider FactSet. Though below recent monthly gains, that would amount to a healthy increase and reflect a historically high number of advertised job openings.

A continuation of robust hiring would underscore the economy’s surprising resilience at a time when the Fed has jacked up its key interest rate by a sizable 5 percentage points — the fastest pace of rate hikes in four decades. Those increases have made mortgages, auto loans and other forms of borrowing significantly more expensive. Yet consumers are still increasing their spending, if modestly, providing the incentive for some companies to keep hiring and expanding.

Economists have projected that the unemployment rate dipped last month from 3.7% to 3.6%, near the lowest level in five decades.

Even a modest job gain for June would virtually cement the likelihood that the Fed will resume its rate hikes when it next meets later this month. Before pausing last month, the central bank had boosted its benchmark rate 10 straight times. Chair Jerome Powell said then that the Fed had skipped a rate hike so policymakers could take stock of what impact sharply higher borrowing costs have had on the economy.

When they met in June, the Fed’s policymakers indicated that they envisioned as many as two additional quarter-point rate hikes before year’s end. Previously, Fed watchers had expected the officials to signal just one more rate increase this year. Their updated projections reflected the belief of many Fed officials that they need to do more to conquer inflation, which is down sharply from its peak, but at 4% is still well above the Fed’s 2% target.

On Thursday, Lorie Logan, president of the Federal Reserve Bank of Dallas, suggested that persistently high inflation and “a stronger-than expected labor market” mean that borrowing costs will need to go still higher.

“I remain very concerned about whether inflation will return to target in a sustainable and timely way,” Logan said in remarks at a central banking conference in New York. “And I think more-restrictive monetary policy will be needed.”

Other Fed officials are looking for signs of what they describe as better balance in the job market, by which they mean the supply and demand for workers would become more equal. After the economy emerged from the pandemic, the number of available jobs surged above 10 million — the highest level on record. That burgeoning demand for labor coincided with millions of Americans dropping out of the workforce to retire, avoid COVID, care for relatives or prepare for new careers.

With companies struggling to fill numerous openings, many offered sharply higher pay and better benefits to attract or keep employees. Fed officials still worry that rising pay levels will keep inflation chronically elevated once companies pass on their growing labor costs by raising prices.

There has been some progress toward a better alignment of supply and demand: About 2 million people have started looking for work in the past seven months, and most of them have found jobs. As the supply of workers has improved, businesses say they are seeing more people apply for open positions. And the number of job openings dropped in May, a sign that demand for workers is gradually cooling, though it remains higher than in pre-pandemic times.

In another sign of a potential slowdown in the job market, fewer Americans are quitting their jobs to search for new positions. Quits had soared after the pandemic. Millions of Americans had sought more meaningful or better-paying jobs, stoking the pressure on companies to raise pay to keep their employees. In May, about 4 million Americans left their jobs, up from April’s figure but below a peak of 4.5 million reached last year.

“As economic uncertainty has been growing, workers are a little less eager to switch jobs, which might indicate that the labor market will slow down,” said Luke Pardue, an economist at Gusto, which makes payroll software for small- and medium-sized businesses.

Still, other recent reports suggest that the economy has continued to expand and that demand for workers remains high. On Thursday, a survey of service providers — including banks, restaurants and shipping companies — found that the sector expanded at a healthy clip in June and that services companies accelerated their hiring compared with May.

Also on Thursday, the payroll provider ADP reported an explosive increase in hiring by private employers in June — 497,000 added jobs. ADP’s hiring figures, though, often diverge from the government’s official data.

“Time and time again, economists and analysts have expected a strong slowdown to appear in the jobs numbers, which just hasn’t materialized over the past six months,” Pardue said. “Despite a lot of calls for a recession in the near term, the job market remains surprisingly resilient.”

Christopher Rugaber, The Associated Press


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