The labor market added a whopping 372,000 jobs despite the rising recession fears in June alone.
FACTS TO KNOW
Job gains in June far surpassed the roughly 250,000 new jobs economists had forecast but fell short of the revised estimate of 384,000 new jobs added in May, according to data released Friday by the Labor Department.
According to government data, the industries that have developed the fastest include those that provide healthcare, professional and commercial services, and leisure and hospitality. For the fourth straight month, it has remained at 3.6 percent, falling short of the pre-pandemic figure of 3.5 percent in February 2020, when unemployment was at its lowest level since 1969.
The monthly jobs report comes one day after career services company Challenger Gray reported that American companies made 32,517 layoffs in June, up nearly 59 percent from a year earlier and the worst showing since February 2021 as a result of an increase in layoffs in the real estate, automotive, and media sectors.
Also on Thursday, the Labor Department said that 235,000 new unemployment claims were submitted last week, a 4,000 increase from the previous week and the biggest number in six months.
A BRIEF HISTORY
At the height of pandemic uncertainty in the spring of 2020, more than 20 million jobs were lost; nevertheless, the labor market has rapidly and strongly driven the economic recovery. However, persistent inflation and the prospect of increasing interest rates, which frequently have an adverse effect on firm profitability, have raised doubts about the health of the overall economy. The depressing mood has prompted waves of layoffs at recently flourishing technology and real estate firms, and corporate behemoths like Amazon and Walmart have both signaled a slowdown in their hiring requirements. Walmart executives have blamed “overstaffing” for the company’s underwhelming third-quarter profits.
QUOTE OF CRITICAL IMPORTANCE
According to a vice president of Challenger, “many of the industries incurring layoffs this year are now coping with the housing market collapse, as demand for mortgages dries up and financing becomes more challenging and expensive to get.” As fears about the recession and inflation grow, IT businesses are increasingly reducing their workforces. Some businesses give voluntary severance, while others — like Tesla and Meta — actively foster an atmosphere where employees would want to leave.
Last quarter’s disappointing profits were attributed to “overstaffing” at Walmart.
Layoffs are never a pleasant thing, but it appears that pay pressure has reached a climax. If these kinds of data continue for a few more weeks, maybe—just maybe—the financial situation will be precarious enough to allow the Fed to pull down the pace of rate rises.
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