While job growth has slowed, the labor market remains an economic bright spot
A MARTÍNEZ, HOST:
For the next few minutes, we're going to focus on the numbers that go into a critical economic indicator - the monthly jobs report. We're going to go into what they tell us and where they come from. And this morning, we learned that U.S. employers added 372,000 jobs in June. That's down only slightly from the month before and better than many forecasters had expected. Inflation watchdogs might actually welcome some cooling off in the red-hot job market. NPR's Scott Horsley is here with us now.
Scott, what is this report telling us about the overall strength of the job market?
SCOTT HORSLEY, BYLINE: The job market is still chugging along, despite high inflation and waning economic growth. Hiring has slowed a little bit from the beginning of the year, when employers were adding an average of half a million jobs a month. But that slowdown is not surprising. The economy has now replaced nearly all the jobs that were lost in the early months of the pandemic. In fact, employment at private sector businesses is now higher than it was in February of 2020.
Julia Pollak is chief economist at the job search website ZipRecruiter. She says at this point in the recovery, some slowdown in job growth is not something to worry about.
JULIA POLLAK: It shouldn't be seen as a terrible thing or a huge slowdown or an impending recession. That is pretty strong, robust growth.
HORSLEY: Unemployment remained very low last month - 3.6% - unchanged from the month before. The unemployment rate among African Americans actually fell sharply in June, although it's 5.8%. So it's still well above the national average.
MARTÍNEZ: Are there any certain industries where job growth has been stronger or weaker?
HORSLEY: You know, bars and restaurants have been a bellwether throughout the pandemic. They continue to hire at a healthy pace. The leisure and hospitality sector, which also includes hotels and entertainment, added 67,000 jobs last month.
Sarah House, who's a senior economist at Wells Fargo, says that reflects a lot of consumer demand.
SARAH HOUSE: There's a lot of people out there traveling, going out to eat, and so I think there's still a lot of demand for those workers.
HORSLEY: On the other hand, hiring in the construction industry was down last month. We know mortgage rates have gone up sharply, and that's put a dent in the homebuilding business. Construction companies hired only about a half as many people in June as the month before. We also have somewhat slower job growth at warehouses and transportation businesses because people aren't buying quite as much stuff these days. One worrisome sign in today's report - the labor force actually shrank in June by about 350,000 people. In previous months, we had seen a lot of people coming off the sidelines looking for and, in many cases, finding jobs. That movement into the job market appeared to reverse last month.
MARTÍNEZ: We know the Federal Reserve is trying to crack down on inflation. So what does today's report tell us about that?
HORSLEY: Well, you don't see a lot of evidence of a slowdown yet, at least outside the construction sector. Wage growth did decline a little bit last month. Average wages in June were up 5.1% over the year, compared to 5.2% for the 12 months ending in May. That could take a little pressure off inflation, but not much. You know, the Fed has begun raising interest rates pretty aggressively as it tries to crack down on inflation. And there are worries that could tip the economy into recession.
Julia Pollak says a recent survey by ZipRecruiter did find job seekers a little less optimistic about what job prospects might look like six months from now.
POLLAK: They are still doing well in their current job searches, with many having multiple offers to choose from. And yet they see all the headlines about a possible recession, and that's making them nervous about the future.
HORSLEY: You certainly don't see any sign of a recession in this report, not with 372,000 jobs added in a month. But both employers and workers are getting a little more cautious about what lies ahead.
MARTÍNEZ: That's NPR's Scott Horsley breaking down the monthly jobs report.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.