US employers hired far more workers than expected in June and continued to raise wages at a steady clip, signs of persistent labor market strength that give the Federal Reserve ammunition to deliver another 75-basis-point interest rate hike this month.
he Labor Department’s closely watched employment report also showed no indication that companies were reducing hours for workers. Also, the number of people working part time for economic reasons fell sharply, dropping below its pre-pandemic level.
“Today’s job number should soothe fears of an imminent recession, but it does nothing to relieve fears of considerable further Fed tightening,” said Seema Shah, chief global strategist at Principal Global Investors. “The job market remains severely tight.”
Nonfarm payrolls increased by 372,000 jobs last month. Employment is now 524,000 jobs below its level in February 2020.
The private sector has recouped all the jobs lost during the Covid-19 pandemic and is 140,000 higher than in February 2020, while government employment is still in the hole by 664,000.
Last month’s broad increase was led by the professional and business services industry, which added 74,000 jobs. Leisure and hospitality payrolls increased by 67,000 jobs. But employment in the industry remains down by 1.3 million since February 2020.
There were also strong payrolls gains in the healthcare, information as well as transportation and warehousing industries.
The unemployment rate was unchanged at 3.6pc for a fourth straight month, in part as people left the labor force.
The Fed wants to cool demand for labor to help bring inflation down to its 2pc target. The US central bank’s aggressive monetary policy posture has heightened recession worries.
In June, it raised its benchmark overnight interest rate by three-quarters of a percentage point, its biggest hike since 1994. Markets overwhelmingly expect the Fed, which has increased its policy rate by 150 basis points since March, to unveil another 75-basis -point hike at its meeting later this month.
The release next Wednesday of inflation data for June is expected to show consumer prices accelerating and will give policymakers another reason to raise borrowing costs further.