Job Report June: Salary growth likely to slow further

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Recognition…Hiroko Masuike/The New York Times

After more than two years of outsized job growth following the biggest shock to the jobs market on record, job creation most likely slowed sharply in June and is likely to continue to do so in the second half of the year, forecasts say.

Economists polled by Bloomberg expect Friday’s Labor Department monthly report to show employers added 268,000 new jobs in June — a figure well below and only slightly above the average of 545,000 added jobs per month last year in April 2021, the slowest month for job growth since President Biden took office.

The US economy has almost regained the 22 million jobs it lost in the early stages of the pandemic in 2020, but any incremental progress has become more difficult.

That’s the result of two forces: fewer workers are available or willing to fill vacancies, and demand is slowing as higher interest rates, imposed by the Federal Reserve to fight inflation, take their toll.

“The recovery phase from the pandemic is really over now, and we’re in an expansion,” said Bill Adams, Comerica Bank’s chief economist. “So that’s constrained by the potential growth rate of the economy, the growth rate of the labor force – which has slowed sharply – and then tighter fiscal and monetary policies.”

A smaller number may not be a cause for concern. The number of people quitting their jobs remained near record highs in May, the Labor Department reported this week, a sign workers are still confident they can find other jobs. The 11.3 million opens cited in this report suggest they are right.

But consumer spending, which drives most American economic activity, has fallen in recent months as high food prices have eroded disposable income and weakened demand for durable goods like cars and appliances. This is likely to impact manufacturing employment, a closely-watched industry survey showed this week showed was slowed down.

Small businesses are in a particularly somber mood, according to the National Federation of Independent Business reported last month in its long-running survey, though they still cite the difficulty of finding qualified workers a top concern.

Economists also expect Friday’s report to show that wages did not rise as much in June as in previous months, which would throw the average American worker even further behind rising prices and cause wallets to be held tighter .

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