For many months now, the US job market has resisted the efforts of the Federal Reserve Board to cool the economy and has stayed red hot. This, in turn, has frustrated the Fed, which views a softer labor market as key to fighting inflation.
But perhaps the Fed is starting to get what it wants.
In the Bureau of Labor Statistics report just released, payrolls grew by 209,000. This is below the roughly 225,000 forecast by economists, and well below the torrid rates observed in April and May (which themselves were revised downward by substantial amounts). Employment growth was observed in most industries, but at lower rates than during the past several months. Wage growth has also moderated a bit at 4.3% over the past few months.
The data on the household side showed a steady labor market – with the unemployment rate at 3.6% and labor force participation remaining constant. There was a notable uptick in the number of people working part-time who would prefer full-time employment – often an indication of a slowing job market.
Finally, these data are consistent with the job vacancy rates published earlier this week by BLS. The job vacancy rate dipped to 5.9% – still quite high, but down from the very high rate of 7% a year ago.
All in all, this is a labor market that is finally showing some signs of cooling. The Fed will likely be pleased by this, and may choose to slow down the pace of interest rate increases – at least until more data can be observed on inflation and wages.