Labor Department reports employers added 209,000 jobs in June
ROB SCHMITZ, HOST:
The pace of job growth slowed last month, but employers are still hiring. This morning, the Labor Department reported that U.S. employers added 209,000 new jobs in June, while the unemployment rate inched down to 3.6%. For more, we're joined by NPR's Scott Horsley. Good morning, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Rob.
SCHMITZ: So forecasters have been expecting to see a slowdown in job growth for some time now. Has it finally arrived?
HORSLEY: This might be it. Two hundred and nine thousand net jobs in June is still a very respectable number, but it is a downshift from what we saw in the previous month. Job gains for April and May were also revised down. We continue to see a lot of hiring in service industries. Health care added 41,000 jobs last month. Leisure and hospitality added 21,000. But we're starting to see job cuts in some other sectors, like retail and warehousing.
And that's in line with what we know about consumer spending habits. You know, people are spending less money on stuff these days and more money on services like travel and entertainment. Nela Richardson, who's chief economist at the payroll processing company ADP, says that's shaping the area where new jobs are still being added.
NELA RICHARDSON: We're seeing that consumer-facing services are really leading the way in last month's job creation. Essentially, jobs are following the consumer.
HORSLEY: And as consumer spending on goods declines, we continue to see pressure in manufacturing. Factories added a scant 7,000 jobs last month after losing 3,000 jobs the month before.
SCHMITZ: So it sounds like kind of a two-speed economy with some employers and some industries adding workers faster than others.
HORSLEY: That's right. And that's about what you'd expect, given the way the Federal Reserve has been aggressively raising interest rates in its effort to control inflation. Some industries are more sensitive to that than others. Manufacturing is particularly sensitive to higher borrowing costs, so not surprising to see some slowdown in gains there. Ordinarily, construction would also be hard-hit by rising interest rates, but construction companies have actually held up pretty well. Richardson, who was a housing economist before she joined ADP, says home builders are staying busier than you might think, even though costly mortgage rates have put a damper on the broader housing market.
RICHARDSON: Usually about 10 to 15% of that market is new construction. Currently, new home sales are 30% of the market because of the lack of existing homes.
HORSLEY: And thanks in part to that demand for newly built houses, construction companies added 23,000 jobs last month, which matches their pace of hiring the month before.
SCHMITZ: That's a lot of workers. And let's talk about those workers. Are there enough people to fill all these jobs?
HORSLEY: People are still coming into the workforce. We added 133,000 workers last month. But that's not enough to keep pace with all the jobs that are being added. And that's why the unemployment rate inched down in June. We're also seeing pretty solid wage gains, which is a sign that employers are still having to compete for talent. Wages in June were up 4.4% from a year ago.
Wages have been climbing faster than prices in recent months, so workers are finally starting to see a real increase in their buying power. That's a little bit concerning, though, for the Federal Reserve. The Fed worries that if wages go up too fast, that could put upward pressure on inflation. The Fed did hold interest rates steady at its last meeting in June, but it's widely expected to raise rates when Fed officials meet later this month.
SCHMITZ: And that's NPR chief economics correspondent Scott Horsley. Scott, thank you.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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