US job growth is at its slowest in over two years.
The Labor Department said that employers added 209,000 jobs in June, which was the smallest increase in more than two years.
That was less than what was projected, but the unemployment rate still went down, from 3.7% in May to 3.6% in June.
As the US central bank raises borrowing costs to fight inflation, the job market is being closely watched.
Even though the Federal Reserve’s base interest rate went from 1% to 5% in just over a year, hiring has stayed strong.
This was true in June, when experts said that the 209,000 jobs added were more than enough to keep up with the growth in the workforce, even though it was the lowest number of jobs added since December 2020.
Wages also kept going up. Since a year ago, the average hourly wage has gone up 4.4%.
But the monthly report and other data, like a drop in job openings, show that the job market may be slowing down.
“Today’s jobs report is a little weaker than many people expected,” said Richard Flynn, managing director at Charles Schwab UK.
“The job market is still tight, but investors may see these numbers as a sign that cracks are starting to show.”
Economists have been saying for months that the economy will slow down because higher interest rates will cause people to cut back on spending in other areas and make it more expensive for businesses to borrow money to grow.
But job growth has always been better than expected, and a strong report on hiring from the private payrolls processor ADP earlier this week made people think it would happen again.
The ADP numbers caused investors to change their bets about how much rates might have to go up on Thursday.
The Labor Department report, on the other hand, showed that hiring in June was led by the government and health care companies.
Retailers and transportation companies cut jobs, but the leisure and hospitality industry added just 21,000 jobs, keeping the total number of jobs in that area below what it was before the pandemic.
Analysts still thought the US central bank would raise interest rates again at its meeting this month.
Even though inflation in the US has gone down a lot since last year, it is still higher than the 2% goal set by the Federal Reserve.
At its last meeting, the bank put out forecasts that showed most officials thought they would need to raise interest rates to keep prices stable.
“The rate of job growth has slowed, but it’s still too high to justify a longer Fed pause.” “Wage pressures are still too strong,” said Seema Shah, the chief global analyst at Principal Asset Management. “Average hourly earnings have been surprising to the upside, so that’s a big deal.”
“Today’s report won’t give the Fed much reason not to raise rates at their meeting in July.”