The Federal Reserve bank increased interest rates by 75 basis points in June to slow the high levels of inflation experienced in the past few months. There are concerns that this rapid tightening of monetary conditions could bring the economy into a recession. Despite these concerns, new data on the labor market released this week show that the labor market remains strong.
First, on Wednesday the Bureau of Labor Statistics (BLS) released the Job Openings and Labor Turnover Survey (JOLTS) for May 2022. The report showed that on the last business day in May the number of job openings declined to 11.3 million, slightly below the all-time high for the series. This decline is likely indicative of a healthier labor market, as the number of job openings is still nearly twice the current number of unemployed workers. Further declines in job openings are needed to bring the labor market into a healthier balance where firms are not having as much trouble finding workers.
Second, the BLS released the employment situation for June. This report also points to a labor market that remains strong with 372,000 new jobs added in June and the unemployment rate at an extremely low 3.6 percent. The gain in employment is similar to the previous two months, where employment gains have averaged just under 375,000 new jobs per month. While slightly lower than the gains over the previous year, these numbers show that the labor market is continuing to grow at a strong pace even as the economy has nearly regained all of the jobs that were lost during the pandemic. Finally, wage gains have remained strong with a 5.1% increase in the past 12 months.
Even though there are increasing worries about an economic slowdown, current labor market conditions remain strong, which is more consistent with an economy that continues to grow after the pandemic. We will continue to monitor changes in the labor market over the coming months to see if further tightening by the Federal Reserve weakens the labor market.
