U.S. employers added a solid 206,000 jobs in June, a sign of continued economic strength – WJBF

FILE – Samantha Grimison makes a cup of coffee at the Blind Tiger Cafe in Tampa, Fla., on Jan. 10, 2024. The U.S. government releases its June jobs report on Friday, June 5, 2024. (AP Photo/Chris O’Meara, File)

WASHINGTON (AP) — American employers completed another strong hiring month in June, adding 206,000 jobs, proving once again that the U.S. economy can withstand high interest rates.

While last month’s job growth was down from May’s 218,000 jobs, it was still a solid gain, reflecting the resilience of America’s consumer-driven economy, which, while slowing, is still growing steadily.

Still, Friday’s Labor Department report contained several signs of a labor market slowdown. The unemployment rate rose to 4.1% from 4%, still low but the highest rate since November 2021. The increase was largely due to 277,000 people starting to look for work in June, and not all of them found jobs right away.

The government also sharply revised downward its estimate of job growth for April and May, by a total of 111,000. It also said average hourly earnings rose just 0.3% from May and 3.9% from June 2023. The year-on-year figure was the smallest increase since June 2021 and is likely to be welcomed by the Federal Reserve in its quest to completely defeat inflation. Most economists expect the Fed to begin cutting its benchmark interest rate in September, and the details in Friday’s jobs report did not disprove that expectation.

Just two sectors – government and a category that includes health care and social assistance, neither of which reflects the underlying strength of the economy – accounted for about three-quarters of June’s job growth. Economists also noted that job growth from April to June averaged 177,000, a decent number but still the lowest three-month average since January 2021.

Other economists agreed that labor market growth was slowing but said it remained robust.

“In both May and June, hiring was above 200,000 even after revisions, and the trend appears to be stable,” said Eric Winograd, U.S. economist at AllianceBernstein. “The best available evidence suggests that the labor market remains strong and that any slowdown will be modest.”

The economic situation is a top concern for voters as the presidential election campaign heats up. Despite steady hiring, relatively low layoffs and gradually cooling inflation, many Americans are angry about still-high prices and blame President Joe Biden for it.

Economists have repeatedly predicted that the labor market would lose momentum amid the high interest rates imposed by the Fed. But then they found that hiring continued to rise strongly. Still, signs of an economic slowdown have emerged in the wake of the Fed’s rate hikes. U.S. gross domestic product – the total output of goods and services – grew at a sluggish annual rate of 1.4% from January to March, the lowest quarterly growth in nearly two years.

Consumer spending, which accounts for about 70% of total U.S. economic activity and has driven growth over the past three years, rose just 1.5% last quarter after growing more than 3% in each of the previous two quarters. In addition, the number of advertised jobs has steadily declined since hitting a record high of 12.2 million in March 2022.

Although employers may not be hiring as aggressively after the difficulties in filling positions over the past two years, not many jobs are being cut either. Most workers enjoy an unusually high level of job security.

Hal Lawton, CEO of Tractor Supply, a retail chain that serves customers in rural areas, said his company is still under pressure to raise wages. The average hourly wage at Brentwood, Tennessee-based Tractor Supply is more than $16. And with rent and food prices soaring, workers are still demanding pay increases.

“The labor market is tight and front-line workers are feeling the strain on their budgets,” Lawton said. “They are still looking for pay raises.”

In 2022 and 2023, the Fed raised its benchmark interest rate 11 times to combat the worst wave of inflation in four decades, reaching its highest level in 23 years. The resulting drastically higher lending rates for consumers and businesses were widely seen as triggering a recession. But that did not happen. Instead, the economy and labor market proved surprisingly resilient.

Meanwhile, inflation has steadily declined from a peak of 9.1% in 2022 to 3.3%. Speaking at a conference in Portugal this week, Fed Chairman Jerome Powell noted that price increases in the U.S. were slowing after higher levels earlier in the year. But Powell warned that more evidence was needed that inflation was moving toward the Fed’s 2% target before policymakers would cut rates.

“This is the kind of report the Federal Reserve wants to see,” said Gus Faucher, chief economist at PNC Financial Services Group. “This looks pretty darn good. The labor market is not as strong as it was this time last year. But the labor market was unsustainably strong then.”

Chris Thomas, an engineering manager in Christiansburg, Virginia, said he could see firsthand that the job market had lost momentum. When Thomas began job hunting in 2021, when tech startups were desperate for new hires, he got interviews at about a third of the companies he applied to. It took him just a month to find a job.

But when he was laid off from a job at a startup in April, it was clear that things had changed. First, he looked to his network of friends and business partners for leads. Without success. Then he sent out hundreds of resumes to places he felt qualified for. He received few responses.

After almost three months of searching, Thomas finally found a job at the end of June.

“This is a very, very different job market than the one we had three years ago,” he said.

___

AP Retail Writer Anne D’Innocenzio in New York and AP Business Writer Christopher Rugaber in Washington contributed to this report.