After more than two years of massive employment growth in the wake of the largest-ever labor market shock, job creation likely slowed significantly in June and likely to continue further into the second half of the year, forecasters say.
Economists polled by Bloomberg expect the Labor Department’s monthly report on Friday to show employers added 268,000 jobs in June — a number well below the average of 545,000 additional jobs each month over the past year, and one slightly higher than it was. It was reported in April 2021, the slowest month for job growth since President Biden took office.
The US economy has regained nearly the 22 million jobs it lost in the early stages of the pandemic in 2020, but every extra step forward is becoming more and more difficult.
This is the result of two forces: fewer workers are available or willing to take on open jobs, and demand is slowing as interest rates, which the Federal Reserve imposes to combat inflation, are taking a toll.
“The pandemic recovery phase is really over now, and we’re well on our way to expanding,” said Bill Adams, chief economist at Comerica Bank. “So this will be constrained by the potential growth rate of the economy, the rate of labor force growth – which has slowed a lot – and then by fiscal and monetary tightening.”
The smaller number may not be a cause for concern. The number of people who left their jobs remained near record levels in May, Ministry of Labor mentioned This week, in a sign that workers are still confident they can find other jobs. The 11.3 million slots cited in this report suggest they are right.
But consumer spending, which fuels most of US economic activity, has drifted lower in recent months as higher food and grocery prices have lowered disposable income and weakened demand for durable goods such as cars and appliances. This is likely to start affecting employment in manufacturing, which was closely watched in this week’s industry survey show up was slowing down.
Small businesses are in a particularly dark mood, the National Federation of Independent Business mentioned last month in their longtime survey, although they still cite the difficulty of finding qualified workers as A major concern.
Economists also expect the report on Friday to show wages did not rise as much in June as in previous months, which would put the average American worker behind price hikes and tighten the hold on portfolios.
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