The U.S. economy added 209,000 jobs in June 2023, according to the Bureau of Labor Statistics. The unemployment rate fell to 3.6%, the lowest level since February 2020. The job gains were broad-based, with notable increases in leisure and hospitality, professional and business services, and transportation and warehousing. The report suggests that the labor market remains strong despite rising interest rates and concerns about a recession.
Monthly Job Creation, January 2022 - June 2023
Source: U.S. Bureau of Labor Statistics
The 209,000 job gains in June were slightly below the consensus forecast of 215,000. However, the unemployment rate fell by 0.1 percentage points, which was better than expected. The labor force participation rate also increased by 0.1 percentage points to 62.2%, which is the highest level since March 2020. That compared to the Dow Jones consensus estimates for growth of 240,000 and a jobless level of 3.6%.
The total, while still solid from a historical perspective, marked a considerable drop from May’s downwardly revised total of 306,000 and was the slowest month for job creation since payrolls fell by 268,000 in December 2020. The unemployment rate declined 0.1 percentage point, according to CNBC.
The job gains in June were led by the leisure and hospitality sector, which added 67,000 jobs. The professional and business services sector added 53,000 jobs, while the transportation and warehousing sector added 34,000 jobs. Other sectors that saw strong job gains in June included manufacturing, education and health services, and construction.
According to CNBC, job growth would have been even lighter without a boost in government jobs, which increased by 60,000, almost all of which came from the state and local levels. Other sectors showing strong gains were healthcare (41,000), social assistance (24,000), and construction (23,000). Leisure and hospitality, which had been the strongest job-growth engine over the past three years, adding just 21,000 jobs for the month. The retail sector, on the other hand, lost 11,000 jobs in June, while transportation warehousing saw a decline of 7,000.
The report suggests that the labor market remains strong despite rising interest rates and concerns about a recession. The unemployment rate is at a near-record low, and the labor force participation rate is rising. However, there are some signs that the pace of job growth is slowing. The job gains in June were the smallest since April, and the unemployment rate is expected to rise in the coming months as the Federal Reserve continues to raise interest rates.
We can then expect the Federal Reserve to raise interest rates this month. Fed officials have been hoping that their aggressive rate-hiking campaign would bring about a slowdown in the job market, and especially in wage gains, which are viewed as a contributor to inflation. While this slowdown in job show that interest-rate hikes have been effective, the labor market remains relatively strong as the benchmark remains above 200,000 jobs per month.