US hiring cools in June, unemployment up slightly

WASHINGTON - US job gains eased slightly in June while unemployment edged up, government data showed on July 5, in the latest sign that the world’s biggest economy is cooling as policymakers hope.

The country added 206,000 jobs in June, said the Labour Department, marking a slower pace of hiring than May’s revised 218,000 figure. But the gains still beat a Briefing.com consensus estimate of 185,000, signalling that the labour market remains relatively resilient.

The jobless rate ticked up from 4 per cent to 4.1 per cent.

Wage growth slowed from 0.4 per cent in May to 0.3 per cent in June. Compared with a year ago, the increase was 3.9 per cent – also easing from before.

Even as wage gains have outpaced consumer price inflation in recent times, this has not translated to rosy sentiment over the broader economy.

This has added to President Joe Biden’s challenges in convincing the public of his economic policies, on top of growing concern over his performance in a recent debate against former president Donald Trump, a Republican.

Congressman Brendan Boyle, top Democrat on the House Budget Committee, stressed on July 5 in a statement that the jobs report “shows an American economy that is still roaring”.

Gradual cooling

The latest report comes on the back of a slump in activity in the manufacturing and services sectors, alongside easing inflation.

While there is some way to go, these indicators could give the US central bank more confidence to begin cutting interest rates – after holding them at a high level in recent months.

This move could, in turn, give the economy a boost.

Ms Rubeela Farooqi, chief US economist at High Frequency Economics, expects that members of the Federal Reserve could start talks about cutting rates at their next policy meeting.

They could lower the policy rate in September, if the data continues to show moderation, she said.

For now, she noted that even though wage growth has decelerated, the rates of change remain elevated compared with pre-pandemic trends.

ZipRecruiter chief economist Julia Pollak told AFP: “The labour market has cooled gradually for the past two years, and has arguably reached a sustainable new normal.”

But significant slowing beyond the current pace would likely stir alarm and raise the risk of “over-cooling”.

On the data’s bearing on Fed policy, Ms Pollak said: “The trend that matters most is continued disinflation in the various measures of consumer and producer prices.”

She added: “The second-most important trend is deceleration in wage growth.” AFP