According to the latest data from the Bureau of Labor Statistics (BLS), the US economy added 206,000 jobs in June, indicating a slight slowdown in the labor market.
This figure closely matches economists’ expectations and represents a modest decline from the revised 218,000 jobs added in May.
The June unemployment rate rose to 4.1%, marking the first time it has exceeded 4% in more than two years. This increase of 0.1% compared to May indicates a gradual easing of labor market conditions.
Earlier reports this week already suggested a cooling trend. Payroll processor ADP reported that private sector employment grew by 150,000 jobs in June, up from 157,000 in May. Additionally, outplacement firm Challenger, Gray & Christmas recorded 48,786 job losses in June, down from 63,816 in May, but still up nearly 20% from June of the previous year.
The monthly jobs report, a key indicator for both Wall Street and Washington policymakers, comes as the Biden administration faces challenges to public perception of its economic management. The resilience of the labor market has proven to be a crucial counterweight amid broader economic concerns.
These employment numbers, along with upcoming inflation data, will be critical to the Federal Reserve’s assessment of economic health and its interest rate strategy. The Fed last month kept interest rates at a 20-year high of around 5.3% as it aims to bring inflation back to its 2% target. Inflation stood at 3.4% in May, significantly lower than the peak of 9.1% in June 2022, but still above the Fed’s target.
Minutes from the Fed’s latest meeting, released Wednesday, indicate a cautious approach, with officials waiting for “additional favorable data” before considering rate cuts. Fed Chairman Jerome Powell commented earlier this week on the progress made in rebalancing the labor market, emphasizing the need for confidence in a sustainable reduction in inflation.
The upcoming June inflation report, due on July 11, and the Fed’s next meeting on July 30 and 31, will be key in shaping future monetary policy decisions.