Despite Negative Headlines, 372,000 Jobs Added in June as Labor Market and Economy Diverge
The economy added a surprising 372,000 jobs in June, down slightly from previous months but well above economists’ expectations. June’s impressive growth is nearly two times the pre-pandemic average, where 200,000 jobs added would be a solid number.
The labor market remains strong, despite broader economic uncertainty and an expected slowdown. With unemployment rates near pre-pandemic lows and nearly two job openings for every unemployed person, U.S. businesses need to focus on retaining talent.
In June, the U.S. economy added 372,000 jobs, surpassing economists’ expectations which ranged from around 240,000 to 275,000. April and May numbers were revised downward by a total of 74,000.
June’s impressive job gains are definitely a sign that the labor market is not cooling. The demand for labor remains strong and most growth metrics are still well-above pre-pandemic levels.
The tight labor market does not appear to be letting up. Just this week, the Bureau of Labor Statistics reported 11.3 million job openings in May, down from April’s 11.7 million revised estimate.
The unemployment rate held steady at 3.6% in June – just above the pre-pandemic low of 3.5%. With 11.3 million job openings but only 5.9 million unemployed workers available to fill those open roles, there are nearly two open jobs for each unemployed worker.
One negative in this month’s report – and contributing to the talent shortage businesses face – is labor force participation, the total number of people who are employed or unemployed and looking for work. The labor force declined by 353,000 in June, erasing May’s gain of 330,000. Overall, there are still 560,000 fewer people in the labor force than before the pandemic.
Despite Uncertainty, 2022 Hiring Should Remain Strong
June’s jobs report sheds some light on how U.S. businesses have responded to a range of challenges and uncertainty – inflation, supply chain, global uncertainty and what appears to be another wave of the pandemic, among other factors.
These challenges have led many economists to project an economic slowdown in late 2022 or 2023. But there are signs that the labor market and economy are diverging. A slower pace of job gains is inevitable given unprecedented growth over the past year-and-a-half. The economy has averaged 527,000 jobs added per month since January 2021 – more than twice the pre-pandemic monthly job gains of 190,000.
Especially as we approach pre-pandemic employment levels, monthly job gains are likely to moderate. With expectations of an economic slowdown, the labor market is likely to remain tight. Labor demand remains high, and the talent pool is not getting bigger.
For now, the outlook for 2022 remains strong. The tight labor market and turnover are likely to subside somewhat but remain elevated in 2022 – LaborIQ® projects 215 million total job openings, hires and quits in 2022.
Recovery on the Horizon
The economy lost 22 million jobs in the early months of the pandemic, and now just 520,000 remain unfilled. 2022 started with an incredibly strong start to hiring in the U.S. – job gains for the first six months of the year have totaled 2.7 million, an average of nearly 460,000 per month. If we have another two months with over 300,000 jobs added, we will reach pre-pandemic employment levels in August – much more quickly than many expected a couple years ago.
LaborIQ by ThinkWhy reports, forecasts and advises on employment conditions and the impact to jobs, industries and businesses across all U.S. cities.