US employers add 372K jobs in sign of resilience

Surprising gain in June likely to spur the Fed to keep raising interest rates

WASHINGTON — America’s employers shrugged off high inflation and weakening growth to add 372,000 jobs in June, a surprisingly strong gain that will likely spur the Federal Reserve to keep sharply raising interest rates to try to cool the economy and slow price increases.

The unemployment rate remained at 3.6% for a fourth straight month, the government said Friday, matching a near50-year low that was reached before the pandemic struck in early 2020.

The robust pace of hiring shows that businesses still want to add workers to meet high customer demand — a trend that should ease concerns that the U.S. economy might be on the verge of a downturn. The durability of the job market suggests that the economy remains on firm footing, at least for now.

“For all the doom and gloom that’s in the markets right now, companies themselves still seem pretty upbeat on their own progress,” said James Knightley, chief economist at ING, a bank. “It sort of dampens the near-term fear that we’re heading into an impending recession.”

Numerous sectors of the economy posted strong job gains in June. Health care added 78,000, transportation and warehousing 36,000 and professional services — a category that includes accounting, engineering and legal services — gained 74,000. And a sector that includes mainly restaurants, hotels and entertainment jobs added 67,000.

Still, there is plenty of uncertainty clouding the economy’s future path. Economic growth has likely been negative for two straight quarters, consumers are slowing their spending with inflation at a fourdecade high and home sales have fallen as the Federal Reserve has moved to raise borrowing costs. Hiring could weaken in the coming months as the Fed’s rate hikes increasingly take effect.

And some companies are announcing layoffs, or have paused hiring. In particular, several large retailers, including Walmart and Amazon, have said they overhired during the pandemic, with Walmart reducing its headcount by attrition.

Tesla is cutting about 3.5% of its total headcount. Netflix has laid off about 450 employees after it reported losing subscribers for the first time in more than a decade. The online automotive retailer Carvana and real estate companies Redfin and Compass have also announced job cuts.

The past year’s streak of hiring has itself contributed to inflation and heightened pressure on the Fed to slow borrowing and spending. The central bank has already embarked on its fastest series of rate hikes since the 1980s. Additional large rate increases would make borrowing much costlier for consumers and businesses and increase the risk of a recession over the next year.

When the government reports on June’s inflation figures next week, it will likely remain high and could even increase from the 8.6% year-over-year reading in May. But many economists expect it to decline after that.