The latest evidence of the country’s economic strength makes it almost certain that the Fed will resume its interest rate hikes later this month, having halted its streak of 10 rate hikes, aimed at curbing inflation.
The June hiring figure reported by the government on Friday is the smallest in two and a half years. However, it continues to show a strong job market that has produced a historically high number of job openings. The unemployment rate fell from 3.7% to 3.6%, near a five-decade low.
Most of the details in the report underscore the resilience of the labor market. The length of the average work week increased, an indication that customer demand is strong enough to keep employees busy. In addition, wage growth accelerated: hourly pay rose 4.4% over the previous year. Wages are now growing faster than the annual rate of inflation, which rose to 4% in May.
The wage data is likely to raise concerns at the US central bank. The Fed is concerned that faster wage gains will fuel inflation, by prompting companies to raise their prices to offset higher labor costs. The Fed wants hiring and salary increases to slow before stopping its rate hikes.
The economy is affected by high interest rates, a high inflation rate, and persistent concerns about a possible recession as a result of the Federal Reserve’s ever-higher interest rates. However, many industries continue to add jobs to keep up with consumer spending and restore their workforce to pre-pandemic levels.
