Business

Unexpectedly Strong Job Growth in the US in June

July 8, 2024

Official data shows that the US economy nonetheless generated more job openings than anticipated last month, despite a slowdown in job growth.

In June, businesses gained 206,000 jobs, while May’s employment figure was cut down from 272,000 to 218,000.

In the United States, the unemployment rate ticked up to 4.1% and pay growth hit its lowest point in three years.

The findings, according to analysts, might bring the Federal Reserve one step closer to lowering interest rates later this year.

Many predicted that June would see a net gain of 190,000 jobs for the US economy.

According to Bowerstock Capital Partners CEO Emily Bowerstock Hill, the numbers were “relatively benign”.

“The data isn’t bad enough to alarm markets, and not bad enough to worry the Fed,” according to her.

That the Federal Reserve has “very clearly telegraphed they are expecting one cut” this year is something she elaborated on.

In June, US interest rates were unchanged from July of last year, hovering between 5.25 and 5.5%.

On Wednesday, the minutes of the most recent meeting of the US central bank were released. In them, officials noted that “price pressures were diminishing” and that the economy seemed to be slowing down.

At the Federal Reserve’s September meeting, market participants are pricing in a rate drop with a probability of about 72%; furthermore, the likelihood of a second rate cut in December is increasing.

The March prediction that interest rates would decrease by three quarters of a percentage point this year was, however, discarded in June by policymakers. This meant that reduction would have started this summer and continued until the US presidential election on 5 November.

With price increases “stickier” than anticipated and a jobs market that data indicated was strong, the Federal Reserve revised its forecast for this year to reflect the possibility of a single quarter-point reduction. This revision occurred in June.

International central banks often drop rates in tandem with the Federal Reserve, even though May’s statement by Bank of England governor Andrew Bailey that “there is no law that the Fed has to go first” set a precedent.

Unexpectedly Strong Job Growth in the US in June

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