Jul 08, 2022 01:36AM ET
By: AnalysisWatch
U.S. employers probably hired the fewest workers in 14 months in June, but the unemployment rate likely remained near pre-pandemic lows. This underscores the tightness in the labor market, which could encourage the Federal Reserve to raise interest rates another 75 basis points this month.
Despite the expected slowdown in job growth last month, Friday's highly anticipated employment report from the Labor Department could ease fears of a recession that have grown in recent days after a series of tepid economic data points, from consumer spending to manufacturing.
While demand for workers in the interest-rate-sensitive goods-producing sector of the economy is cooling, companies are scrambling to find workers in the large service sector. At the end of May, there were 11.3 million job openings, or 1.9 jobs for every unemployed person.
According to a Reuters poll of economists, nonfarm payrolls likely rose by 268,000 last month after increasing by 390,000 in May. That would be the smallest gain since April 2021 and just over half the monthly average of 488,000 jobs this year. Estimates ranged from 90,000 to 400,000.
Still, the pace would be well above the average that prevailed before COVID-19, and employment would be about 554,000 jobs below pre-pandemic levels.
Most industries, with the exception of leisure and hospitality, manufacturing, health care, wholesale trade, and community education, have recovered all jobs lost during the pandemic. The unemployment rate is expected to remain unchanged at 3.6% for the fourth consecutive month.
The Fed is looking to cool demand for labor to bring inflation down to its 2% target.
The release of June inflation data next Wednesday, which is expected to show a rise in consumer prices, should give policymakers further room to raise borrowing cost