The U.S. economy added more than 370,000 new jobs last month, the Labor Department said Friday, a tally that smashed Wall Street forecasts and likely cements the case for sharper Federal Reserve rate hikes over the coming months.
The Bureau of Labor Statistics said 372,000 new jobs were created in June, with headline unemployment rate holding at a post-pandemic low of 3.6% for the fourth consecutive month.
The June tally was around 100,000 ahead of the Street consensus forecast of 268,000. The BLS also revised its May jobs addition tally lower by 6,000 to 384,000 from its original estimate of 390,000. April totals were revised lower, as well, to 368,000. Hiring was powered by the sectors, the BLS said. Employment in leisure and hospitality, as well as healthcare, was also firmly higher, the BLS said.
Average hourly earnings rose 5.1% from last year, and 0.3% on the month, to $32.08, while the number of hours worked held at 34.5.
"In contrast to what some pundits are suggesting, the economy is not currently in recession and we should expect the labor market to expand but at a slower pace as firms still struggle with finding suitable workers," said Jeffery Roach, chief economist at LPL Financial. "Firms will still likely be increasing wages as they deal with a shortage of qualified workers and elevated quit rates."
On Wall Street, the S&P 500 was marked 6 points higher on the session while the Dow Jones Industrial Average gained 72 points. The tech-focused Nasdaq gained 12 points.
Benchmark 10-year Treasury note yields bumped higher, to 3.065% while 2-year notes were pegged at 3.105%. The dollar index, which tracks the greenback against a basket of its global peers, was marked 0.3% lower at 106.943.
The CME Group's FedWatch tool suggests a 94% chance of a 75 basis point rate hike later this month from the Fed following the jobs data, with an 80% chance of a follow-on move of 50 basis points in September.
Labor Department data earlier this week showed that weekly jobless claims rose by 4,000 from the prior period to 235,000 with announced job cuts rising by 57% to just over 32,500 positions, the highest in sixteen months.
That contrasts sharply with data from the BLS's monthly Job Opening and Labor Turnover (Jolts) report, known as Jolts, which showed 11.3 million unfilled positions in the job market over the month of May.
"The high number of people not returning to the work force is one of the nagging problems with the labor market right now," Roach added. "Relative to pre-pandemic levels, the economy has 4.8 million more people out of the labor force. Some likely took early retirements but that does not explain the rest of the story. The labor market will remain tight with low unemployment as roughly 5 million people have not yet rejoined the workforce."
