Amid several indicators of a slowdown, last week, the US economy sent a strong signal in the opposite direction. The Labor Department announced that 372,000 new jobs were created in June, while the unemployment rate remained at 3.6 percent, very close to the pre-pandemic level, which was the lowest in half a century.
All sectors —except the government— increased hiring, led by 77,800 new jobs created in healthcare and 74,000 in professional and business services. True, job creation decreased in the last quarter to a monthly average of 375,000, from 539,000 in the first quarter. Even so, the still robust job creation is exceptional, because several other indicators are pointing to a slowdown.
For instance, the economy contracted in the first two quarters of this year, at a yearly rate of 1.6 percent in the first quarter and 1.2 percent estimated for the second quarter. Additionally, increased interest rates and inflation have slowed down the housing market and consumer spending. Also, this year the stock market registered the worst first half year performance since 1970, while commodity prices dropped, after rising in the first half of the year. Even oil, which reached more than $120 per barrel at the start of this year, this week dropped to $100.
Thirsting for good economic news, the strength of the labor market was immediately proclaimed as “historic” by the White House. It remains to be seen how the central bank will deal with the mixed signals at its next meeting of July 26-27.
