Although hiring in the government and healthcare sectors accounted for nearly three-quarters of the payroll gain in June, U.S. employment increased solidly. Meanwhile, the unemployment rate reached a two-and-a-half-year high of 4.1%, indicating a weakening labour market that keeps the Federal Reserve on track to reduce interest rates soon.
In addition, the economy produced 111,000 fewer jobs in April and May than initially predicted, according to the Labour Department’s closely followed employment report on Friday. This suggests that the trend in payroll growth was slowing.
Scott Anderson, chief U.S. economist at BMO Capital Markets, stated, “We now have concrete evidence of labour market cooling with a somewhat alarming rise in the unemployment rate in recent months that should give policymakers’more confidence’ that consumer inflation will soon return to the 2.0% target on a sustainable basis.”
The Labour Department’s Bureau of Labour Statistics reported that government hiring contributed to a 206,000 increase in nonfarm payrolls last month. Payrolls increased by 190,000 last month, as economists surveyed by Reuters predicted, while the unemployment rate remained at 4.0%.
The first half of this year has seen an average monthly increase in jobs of roughly 222,000. Considering a recent spike in immigration, analysts calculate that the economy needs to create between 180,000 and 200,000 jobs per month to keep up with growth in the working-age population.
