Home Interest rate Strong U.S. jobs report could mean more interest rate hikes to come, UNC professor says

Strong U.S. jobs report could mean more interest rate hikes to come, UNC professor says


CHAPEL HILL – The latest US jobs data showed the US economy added 372,000 jobs in June, beating analysts’ expectations.

The report, from the US Bureau of Labor Statistics, also showed that the unemployment rate in the country remained unchanged at 3.6%.

“We’ve had a hell of a report,” said Christian Lundblad, Richard Levin Professor Emeritus of Finance at the University of North Carolina at Chapel Hill, at a Friday morning press conference.

“Strong growth with an increase of 372,000 jobs for the last month just ended, well above market expectations,” Lundblad said.

And while, on the net, it’s a solid report, Lundblad said, “we’re here this morning yearning for more clarity.”

This is because the US economy is showing a very strong labor market report, suggesting a lot of strength, but at the same time there are other economic metrics such as inflationary pressures and consumer sentiment that we are feeling all, Lundblad said.

Friday’s jobs report could be telling as recession worries mount

Not a recession?

The review of the last month of employment data, which exceeded previous expectations, suggests that the US economy is not currently in recession, said Dr Anne York, professor of economics and program director at the Meredith College, in an interview with WRAL TechWire on Friday Mornings.

“If we just look at jobs data, nobody can say we’re in a recession,” York said. “We have always had very strong growth in the number of non-farm wage earners of 372,000 jobs added to the economy and near a historically low unemployment rate of 3.6%. ”

And there has been growth in every industry except government jobs, York noted.

In addition, York said, the latest job vacancies and labor turnover survey, released earlier this week, showed there were 11.3 million job vacancies. in May, ie 1.9 jobs for each job seeker, and historically low levels of layoffs. This data, York also said, “shows a strong labor market.”

But, there are other indicators that the U.S. economy could be in recession, including the decline in second-quarter GDP growth and future expectations, Lundblad said.

Big jobs surprise: US adds 372,000 in June despite recession fears

Back to pre-COVID levels?

Employment has returned to pre-COVID levels, Lundblad said, while noting that job markets have changed over the past two and a half years.

“Employment still remains slightly below where we were, some sectors have exceeded it, others have not,” Lundblad said. “It doesn’t look like a dire situation, despite the fact that we’re all grappling with the inflation we’re all feeling and economic declines in other dimensions.”

But what Lundblad said of interest in the latest month of jobs data is not just the overall level of unemployment, which remained unchanged at 3.6%, but the rate of people working but feeling underemployed. employed.

These are people who work part-time and might prefer to work full-time, Lundblad explained. “But again, over there, we’re basically hitting record highs.”

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And another measure of the labor market is the participation rate of prime-age workers, which has returned, for the most part, to pre-COVID levels, Lundblad said.

“There are, however, many Americans who have retired and are not coming back,” Lundblad said.

But aggregate labor force participation data remains an indicator that can be important to track, York said. That’s because overall, York said, “we have even fewer people working or looking for work than before the pandemic.”

Even then, employers of all sizes, from small businesses to Fortune 100 companies, continue to post job openings. Yet the latest job posting data is not uniform across the economy as there may be a shift in the balance of power between tech workers and tech companies as some indicated a slowdown in hiring, including Meta.

“While it’s good for workers to have a strong job market, it can be an inflationary force in the economy,” York said.

Through a turbulent labor market, job opportunities abound in the Triangle

Inflation and response

If inflationary pressures continue, the Federal Reserve will continue to act aggressively to counter them, Lundblad said, noting that strong labor market data from the economy could allow for a more aggressive response to curb inflation.

“As a testament to the strength of the labor market,” Lundblad said, “hourly wages are above historical average trends.”

But real wages, measured by adjusting wages for inflation, don’t move as quickly and in some cases, and in some industries, may actually decline, Lundblad said.

“A really complicated environment,” Lundblad said. “If this puts pressure on inflation, the Fed will have to act.”

And another three-quarters of a percentage point hike in the federal funds rate isn’t out of the question, Lundblad said. “The Fed won’t necessarily back down,” he added.

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