Job seekers attend the JobNewsUSA.com South Florida Job Fair on June 26, 2024 at Amerant Bank Arena in Sunrise, Florida.
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The U.S. economy once again added slightly more jobs than expected in June despite rising unemployment, Department of Labor Report Friday.
Nonfarm payrolls rose by 206,000 in May, better than Dow Jones’s forecast of 200,000 but below May’s downwardly revised increase of 218,000, which was revised down sharply from the original estimate of 272,000.
The unemployment rate unexpectedly climbed to 4.1%, hitting its highest level since October 2021, providing conflicting signals as Federal Reserve officials weigh their next steps in monetary policy. The unemployment rate was previously forecast to remain stable at 4%.
“The job market is bending but not breaking out yet, which strengthens the case for a rate cut,” said David Russell, head of global market strategy at TradeStation. “It’s not too hot, it’s not too cold. Goldilocks is here and September is playing out. effect.”
The rise in the unemployment rate was driven by a 0.1 percentage point rise in the labor force participation rate, which measures the level of people of working age who are employed or actively looking for work, to 62.6%.
The broader unemployment rate, which includes frustrated workers and those working part-time for financial reasons, held steady at 7.4%. Household employment, used to calculate the unemployment rate, rose by 116,000. The household survey also showed that the number of full-time workers fell by 28,000, while the number of part-time workers increased by 50,000.
Although job creation exceeded expectations in June, that was largely due to an increase of 70,000 government jobs. Additionally, the healthcare industry has been leading the way, adding 49,000 people, while social assistance contributed 34,000 and construction added 27,000.
Several industries posted declines, including professional and business services (-17,000) and retail sales (-9,000).
In terms of wages, average hourly wages increased by 0.3% this month and 3.9% annually, both in line with expectations. The average working week has remained stable at 34.3 hours.
Stock futures edged higher after the report, while Treasury yields were negative.
In addition to the big revision to May’s payrolls, the Bureau of Labor Statistics also revised down its April payrolls estimate to just 108,000, 57,000 fewer than its previous estimate.
The long-term unemployment rate rose sharply this month, rising by 166,000 to 1.5 million, compared with 1.1 million a year ago. The U.S. Bureau of Labor Statistics said the long-term unemployed accounted for 22.2% of the total unemployed population, compared with 18.8% a year ago.
The unemployment rate among black workers rose to 6.3%, the highest level since March. The share among Asians jumped a full percentage point to 4.1%, the highest level since August 2021.
The report comes as Fed officials consider next steps for monetary policy.
At their most recent meeting, policymakers said they needed to see more progress on inflation before lowering interest rates, according to minutes released earlier this week, while noting that a strong economy and, in particular, a solid labor market , alleviating the urgency for action in the near future.
Despite signs to the contrary, the market expects two rate cuts before the end of 2024, assuming a cut of 25 percentage points. Favorable data” promotes cuts.
“There are no issues here that would cause the Fed to rush to the rescue with rate cuts, and the labor market is consistent with continued slowing in inflation,” said Robert Frick, corporate economist at Navy Federal Credit Union. “That should lead to one or two cuts this year.” reduce.”
The Fed set its key lending rate target at a range of 5.25%-5.50%, the highest level in 23 years and about a year ago.
Fissures have emerged in the labor market recently, with surveys of purchasing managers showing hiring shrinking in both manufacturing and services.
In addition, broader economic growth is slowing. According to data from the Federal Reserve Bank of Atlanta, gross domestic product grew at an annual rate of only 1.4% in the first quarter and is expected to grow at only 1.5% in the second quarter.