The US economy continues to show signs of tremendous strength, benefiting from a labor market that shows no signs of exhaustion. In June, the world's largest economy generated a total of 372,000 new non-agricultural jobs, only 12,000 fewer than in May. The unemployment rate, at historical lows, remained at 3.6% of the active population for the fourth consecutive month, according to the Labor Department's Bureau of Labor Statistics reported yesterday. If Jerome Powell, chairman of the Federal Reserve, and his team of governors had any doubts about whether to continue with their aggressive rate hikes without damaging the economy, they will now feel more comfortable to act without so many worries.
The net growth of employment in June thus remained in line with the average monthly gain of 383,000 jobs corresponding to the previous three months and stands at 524,000 jobs –three tenths– of the level of employment prior to the pandemic, in February 2020 This recovery has been achieved after the brutal effort of the Fed, which brought out all the artillery in March 2020, and the stimuli approved by the Biden Administration in the last two years.
Employment in the private sector has recovered the net losses related to the pandemic and is already 140,000 jobs higher than in February 2020, while public employment still carries a deficit of 664,000 jobs. In the month of June, notable increases in the number of jobs were seen in the professional and business services, leisure, hospitality and health care sectors.
For its part, the US unemployment rate in June was 3.6% for the fourth consecutive month, keeping the number of unemployed essentially unchanged at 5.9 million. These figures differ little from the values of February 2020, when unemployment was 3.5% and 5.7 million unemployed were recorded.
The Federal Reserve will hold the next meeting of the Federal Open Market Committee, the body in which monetary policy decisions are adopted, on July 26 and 27. After the latest rate hikes, the official price of money is now in the range of 1.5%-1.75% and yesterday's employment data will help central bankers to follow the planned plan. The more signs of overheating in the economy they see, the more reason they have to raise rates.
Everything leads in that direction. The president of the New York Federal Reserve, John Williams, said yesterday that "to determine how much and how fast rates will rise, we will closely watch how the economy responds to tighter financial conditions and how inflation, inflation expectations and economic prospects. Short-term debt shoots up its profitability and the dollar is close to parity with the euro.
