The June jobs report from the Labor Department is expected to show that employers added around 200,000 roles, a decrease from the 272,000 gained in May. Economists believe that the labor market is gradually slowing down, but remains robust. The unemployment rate is predicted to have stayed steady at 4% in June, a historically low level not exceeded for over two years.
Despite the slowdown, economists do not expect a crash in the American labor market. ADP’s data on private-sector hiring revealed that only 150,000 roles were added in June, driven mostly by the leisure and hospitality industry. Other indicators also point to slowing growth in the labor market.
The Institute for Supply Management reported a drop in the Purchasing Managers Index survey for June, indicating a contraction in activity for the second time in the past three months. With business activity slowing, inflation is also cooling. The Federal Reserve’s preferred gauge of price growth, the Personal Consumption Expenditures price index, climbed 2.6% from a year ago in May, the lowest annual rate since March 2021.
Fed Chair Jerome Powell mentioned that risks to inflation and employment goals have come closer to balance. There is a concern that the Fed’s high-interest rate strategy could potentially hinder the economy, leading to higher claims, layoffs, and job market pullbacks. Despite this, economists believe that the current state of the labor market is experiencing a “modulated cooldown” and is striking the right note at the right time.
Photo credit
www.nbcnews.com