US sees big job gains in June, fueling inflation wories

US sees big job gains in June, fueling inflation wories

The US economy added more jobs in the first half of 2022 than in most full years since 200
The US economy added more jobs in the first half of 2022 than in most full years since 200. Photo: OLIVIER DOULIERY / AFP/File
Source: AFP

The US economy added far more jobs than expected in June and wages rose, according to government data released Friday which could fuel fears about accelerating inflation.

There were 372,000 new positions added in the month, nearly 100,000 more than economists forecast, and the unemployment rate held steady at 3.6 percent, the Labor Department reported.

Average hourly earnings rose to cement a 5.1 percent increase over the past 12 months, the report said, while the share of adults in the labor force was little changed.

The data will provide little comfort to the Federal Reserve, which has declared war on inflation that has risen at the fastest rate in more than 40 years. The central bank has implemented aggressive interest rate hikes to try to cool demand.

Atlanta Federal Reserve Bank President Raphael Bostic said the strong labor market is a good thing, but he stressed that he is "fully supportive" of another super-sized increase in the benchmark borrowing rate later this month, matching the three-quarter percentage point hike in June.

Read also

Asian stocks extend global rally as recession fears ease for now

"We're starting to see those first signs of slowdown, which is what we need because what we have right now is a great imbalance between supply and demand that's driving the inflation," Bostic said on CNBC.

PAY ATTENTION: Follow us on Instagram - get the most important news directly in your favourite app!

That imbalance will have to come into alignment "if we're going to get that inflation under control."

There are growing fears that the Fed's efforts to tamp down price pressures will push the world's largest economy into recession.

Fed Chair Jerome Powell has argued that the strong US job market means the economy is well-positioned to withstand the rapid ramp up in borrowing rates, although he and other policymakers acknowledge the process may inflict some pain.

The economy gained 2.74 million jobs in the first half of the year, which is more than most full years dating back to 2000.

Read also

Recession fears drag on euro and crude, Asian markets mixed

'Fanciful' recession fears

Total nonfarm employment remains just slightly below the pre-pandemic level in February 2020, but the private sector has recovered and is 140,000 higher than it was before Covid-19 hit, according to the report.

Big gains in the month came in the health care and leisure and hospitality sectors, while retail rebounded after a big decline in May, the data showed. Manufacturing added 29,000 positions.

"June’s strong job growth, especially in the teeth of high inflation, shows that the expansion remains on solid ground," said Robert Frick, corporate economist with Navy Federal Credit Union.

Strong consumer demand has anchored the post-pandemic recovery and defied expectations of a slowdown, but economists still believe job creation will start to slow.

Ian Shepherdson of Pantheon Macroeconomics said the recent data "usually would be consistent with a raging economic boom," but the gains last month are "much more about post-Covid catch-up hiring."

Still, he said, "the jobs data support our view that talk of the economy being in recession right now is fanciful."

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.