The labor market in the United States continued expanding vigorously in June. Last week, the Labor Department revealed that 206,000 new nonagricultural jobs were created in June, but the unemployment rate increased to 4.1 percent, from 4 percent in May. This is the fourth consecutive slight increase in the unemployment rate, since the lowest record in 50 years of 3.4 percent was reached last year. Additionally, in June average hourly earnings increased 3.9 percent, above the inflation rate of 2.6 percent in May.
Besides the increase in the unemployment rate, another indication of a slowdown in the labor market is that monthly job creation has averaged 177,000 during the last 3 months, less than the average of 220,000 in 2023. Also, hiring was concentrated in three sectors, government, healthcare and social assistance, which contributed three quarters to job creation in June, while manufacturing and retail lost jobs.
The question is how the central bank will process this indication of a moderate slowdown in the labor market. The head of the central bank, Jerome Powell recognized, at a meeting in Portugal quoted in The Wall Street Journal (07/03/24), that there has been “significant progress” in the US economy, adding they still “want to be more confident that inflation is moving sustainably down.” This was understood as meaning that interest rates will remain unchanged after the next central bank meeting, scheduled for July 30-31 in Washington.
