June Jobs - Payroll Gains Top Estimates; Labor Market Strength Continues

Job gains top estimates, unemployment rate holds at 3.6%.  S. employers added more jobs than expected in June and the unemployment rate held near a fifty-year low, suggesting that for the time being, hiring needs are defying concerns about the economic outlook.  Wage growth (while still elevated) moderated slightly for a second month in a row.  A sustained softening in wage growth would be welcome by the Fed as it endeavors to tamp down the highest inflation levels observed in 40 years.  The central bank hopes to temper demand for workers in order to slow wage growth and inflation without going so far as to cause a recession, which would be accompanied by higher unemployment.   As the labor market reaches pre-pandemic employment levels and the unemployment rate holds at a historically low level, we would have to expect overall job growth to slow in the months ahead.

372K payrolls added in June – 107k more than expected.  The U.S. labor market added 372k jobs in June, coming in stronger than expected and extending momentum in 2022 despite recession fears.  Forecasts ranged from +90K to +415K with a median of +265K.  Job gains were broad based with particular strength in professional & business services (+74K), leisure & hospitality (+67K), healthcare (+57K) and transportation & warehousing (+36K).  At this point, the economy counts just  524K fewer jobs than before the pandemic and essentially all of the change can be attributed to the leisure & hospitality sector which counts 1.3M fewer jobs. Employment in many other sectors is now well above February 2020 levels.

3.6% unemployment – unchanged for a fourth straight month.  The U.S. unemployment rate held steady at 3.6% in April.  Forecasts ranged from 3.3% to 3.7% with a median of 3.6%.  The labor force participation rate was steady at around 62.2% (compared to 63.4% pre-pandemic).  Hourly earnings increased 5.1% over the last year, down from 5.3% in May.  On a month-over-month basis, hourly earnings grew 0.3%, down from +0.4% in May and in line with expectations.