US Economy Adds 206,000 Jobs in June, Unemployment Rises to 4.1%

The US economy added 206,000 jobs in June, meeting economists' expectations, but the unemployment rate rose to 4.1%, the highest in over two years, according to recent labor data.

June Job Growth Slows to 206,000 as Unemployment Rises to 4.1%, Signaling Market Cooling

According to recent labor data from the Bureau of Labor Statistics (BLS), the labor market began to relax in June, adding 206,000 jobs to the US economy.

The number of new jobs aligns with economists' expectations for the month. The figures indicate a slight decrease compared to May when the economy added a revised 218,000 jobs.

The Guardian said the unemployment rate was 4.1% in June, a 0.1% increase from May and the first time it exceeded 4% in more than two years.

According to data released earlier this week, the labor market was beginning to decline. ADP, a payroll firm, reported that private employers added 150,000 positions in June, a decrease from the 157,000 jobs added in May. Additionally, job losses are increasing. In June, Challenger, Gray, and Christmas, an executive outplacement firm, reported 48,786 job cutbacks. This represents a nearly 20% increase from the previous year's June, despite a decrease from 63,816 cuts in May.

The jobs figures, which are released on the first Friday of each month, have been closely monitored by Wall Street, which is eager to see interest rates decrease, and in Washington, where the strength of hiring has been one of the few bright spots for the Biden administration, which is currently grappling with poor polling on its economic policies.

The Federal Reserve employs job figures to ascertain whether the economy is moderating and prepared for a decrease in interest rates, in addition to inflation figures released later in the month.

Fed Maintains Interest Rates at 5.3%, Awaiting Further Data Amid Inflation and Labor Market Concerns

Last month, the Federal Reserve maintained rates at approximately 5.3%, which has remained at this level for nearly a year. The Federal Reserve has been endeavoring to reduce inflation to 2%. In May, inflation was 3.4%, lower than its highest of 9.1% in June 2022 but still higher than the Federal Reserve's target rate.

On July 3, the Federal Reserve released the minutes of its most recent meeting, which indicated that the central bank was awaiting "additional favorable data" before implementing any reductions.

However, the Federal Reserve must ensure that the labor market does not decline excessively when reducing inflation. According to Fed chair Jerome Powell, the labor market has "seen a pretty substantial move toward better balance," and the economy has "made a lot of progress" during an event earlier this week.

“We want to be more confident that inflation is moving sustainably down. We want to understand that the levels that we’re seeing are a true reading on what is actually happening with underlying inflation,” Powell said.

The June inflation figures will be disclosed on July 11. The Federal Reserve's subsequent meeting is scheduled for July 30 and 31.

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