The labor market remains strong, with 372,000 new positions added in June 2022, following a downwardly revised growth of 384,000 in May. Despite mounting economic headwinds, there is little evidence that the labor market is cooling. This might change in the coming months since other economic indicators have already shown that economic growth is slowing in the face of growing inflation and Fed interest rate rises. As a result, hiring may slow down for the rest of the year.
For the fourth month in a row, the unemployment rate stayed at 3.6 percent. The labor force participation rate dipped marginally to 62.2 percent in June, from 62.3 percent the previous month. Overall, employment is close to pre-pandemic levels, with a 0.3 percent decrease from February 2020 to February 2020, representing around 500,000 jobs. Women’s job recovery has been slower, with employment being 0.5 percent lower than pre-pandemic levels, compared to 0.2 percent for males.
Job growth in leisure and hospitality remained strong, with 67,000 new positions added in June. Following employment losses in May, retail trade added 15,400 positions. Transportation and warehousing (35,500), professional and business services (74,000), and health care and social assistance (74,000) all saw job growth (77,800). Hiring in temporary help services (5,400) persisted, which is one of the best leading indications of future employment changes in other industries.
Wage growth is strong, albeit it appears to have peaked. Over the previous year, average hourly wages increased by 5.1 percent and have hovered between 5 and 6 percent (annual growth) since Q4 2021. The labor market is extremely tight, and ongoing recruiting and retention pressures will keep pay growth high. Faster pay rise, in turn, will make it more difficult for price inflation to slow, as firms raise product and service prices to compensate for rising labor expenses.
