That follows a surprise burst of 272,000 new jobs in May that reignited concerns that the Federal Reserve would need to keep interest rates higher for longer to stamp out inflation. But overall, economists say there are enough signs of a broader slowdown in hiring, job postings and wage growth to point to a hardy but gradually slowing job market.
“The labor market is still strong but not quite as strong as it was a year ago,” said Gus Faucher, chief economist at PNC. “If we see a bit slower job growth, a little bit of cooling competition for workers, slightly less wage growth, that should help get inflation back to the Fed’s 2 percent target.”
Inflation, at 3.3 percent, has come down dramatically from its peak of 9.1 percent two years ago, but remains higher than the Fed would like. Wage growth in particular, which can drive prices higher, has been a key focus for the central bank.
Overall, wages have risen 4.1 percent in the past year, though economists expect slower growth in June, further assuaging concerns that inflation could flare up again. Fed Chair Jerome H. Powell this week said the labor market is “cooling off appropriately.”
“It doesn’t look like it’s heating up or presenting a big problem for inflation going forward,” Powell said at the European Central Bank’s annual meeting on Tuesday. “It looks like it’s doing just what you would want it to do, which is to cool off over time.”
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Those signs of cooling are stacking up: Hiring in the service industry contracted in June for the sixth time in seventh months. And unemployment claims ticked up again last week, the ninth straight increase, in a sign that it’s taking people longer to find jobs.
Marcelino Bautista applied to more than a 100 jobs before he finally found one last month, as a systems programmer for a grocery store in Hilo, Hawaii. The 31-year-old graduated from college in May, after six years in the Marine Corps.
“Finding a job was more stressful than I expected,” he said. “I applied for everything, even internships, but it was extremely competitive.”