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Jobs Report: Economy Adds 372,000 Jobs

Steve Goode
Jul 08, 2022

Number slightly higher than expected, contradicting recession predictions.

The U.S. Bureau of Labor Statistics report Friday that the economy added 372,000 jobs in June came as a bit of a surprise, as it contradicts predictions by some of a coming recession.

The report also bolsters the thinking that the Federal Reserve will raise interest rates by 75 basis points once again at its meeting later this month. It would be the second-consecutive increase of that size, as the Fed works to bring down inflation from 40-year highs.

“We believe this report, in particular the robust payroll and wage gains, should reaffirm the Federal Reserve’s commitment to aggressive policy tightening in the coming months,” said Doug Duncan, chief economist at Fannie Mae

According to the BLS the unemployment rate remained at 3.6% and hourly wages grew by 5.1% year-over-year, slightly higher than predicted but down from a peak of 5.6%. Wages also did not keep pace with inflation.

“June’s payroll growth number of 372,000 jobs, and the unemployment rate holding at 3.6%, are both consistent with the strong job market seen thus far in 2022. The economy in the first half of the year averaged 450,000 job gains per month, which is an extremely robust pace by historical standards," said Joel Kan, chief economist for the Mortgage Bankers Association. “This labor market strength comes despite other economic data showing signs of weakening and a higher probability of a recession. With the Federal Reserve intently focused on bringing down inflation, we expect this will not alter near-term expectations for another 75-basis-point rate hike at the next FOMC meeting.”

One of the goals of the Fed’s likely second consecutive 75-basis-point increase is to reduce inflation without hurting employment, while avoiding a recession. Some economists said Friday’s jobs report points to that as a possibility.

“Better-than-expected June jobs report gives hope for the likelihood of a ‘soft landing’ and a ‘jobful’ downturn, which may or may not be a ‘recession,'” said First American Chief Economist Mark Fleming. “With better-than-expected payroll employment, stable unemployment rate, and even increased wage gains, the Fed may yet engineer a ‘soft landing.'”

Education and health services led the way in new hires and there was a small gain for the housing sector in non-residential construction jobs. But the housing market is still stymied by a low supply of stock for sale or rent, accompanied by high labor costs and ongoing supply chain issues.

Realtor.com Chief Economist Danielle Hale said that with higher housing costs “seemingly inescapable and inflation making it harder for households to stick to their monthly budgets, those looking to move may need to get creative.” 

“Fortunately, today’s worker-friendly jobs market may offer a path forward," Hale continued. "Workers who can negotiate a flexible schedule with fewer in-office days may be able to broaden their home search to the more affordable suburbs, without having to worry as much about the price of gas. While other workers may be able to negotiate a remote-work arrangement that enables them to consider moving to a new market with a lower cost of housing, as data suggests some have already done. With the Fed’s monetary tightening expected to eventually cool the labor market, households hoping to establish a new normal with respect to where they work may want to do so sooner rather than later.”

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