The labor market started to ease in June, with 206,000 jobs added to the US economy last month, according to new labor data from the Bureau of Labor Statistics (BLS).
The number of new jobs is close to what economists had expected for the month. The figures represent a slight cooling compared to May, when the economy added a revised 218,000 jobs.
The unemployment rate in June was 4.1%, a 0.1% increase compared with May and the first time the rate has been above 4% in over two years.
Data released earlier this week suggested the labor market was starting to cool. Payroll firm ADP reported that private employers added 150,000 jobs in June, down from 157,000 in May. Job losses also appear to be growing. Executive outplacement firm Challenger, Gray and Christmas reported 48,786 job cuts in June, down from 63,816 cuts in May but still a nearly 20% increase compared with June of last year.
The jobs figures, released on the first Friday of every month, have been closely watched by Wall Street, which is eager to see interest rates drop, and in Washington, where the strength of hiring has been one of the few bright spots for the Biden administration, which is struggling with poor polling on its economic policies.
Along with inflation figures, which come out later in the month, the Federal Reserve uses jobs figures to determine whether the economy is cooling and ready for interest rates to drop.
Last month, officials at the Fed kept rates at a two-decade high of around 5.3%, where it has been for nearly a year. The Fed has been trying to bring inflation down to 2%. In May, inflation sat at 3.4% – lower than its peak of 9.1% in June 2022, but still higher than the Fed’s target rate.
Minutes from the Fed’s last meeting were released on Wednesday and showed the central bank was waiting for “additional favorable data” before making cuts.
But in bringing inflation down, the Fed must make sure the labor market is not cooling too much. Earlier this week, the Fed chair, Jerome Powell, said at an event that the economy has “made a lot of progress” and has “seen a pretty substantial move toward better balance” in the labor market.
“We want to be more confident that inflation is moving sustainably down. We want to understand that the levels that we’re seeing are a true reading on what is actually happening with underlying inflation,” Powell said.
Inflation figures for June will be released on 11 July. The Fed’s next meeting is on 30 and 31 July.