Buy Crypto
Pay with
Flash news
copy link
create picture

US Job Growth Remains Historically Strong, Exceeding Economists' Expectations

Helene Braun - CoinDesk
2022-07-08 12:49
U.S. job growth cooled in June, but still vastly exceeded economists expectations, a U.S. government report Friday showed.
Employers added 372,000 jobs last month, a minimal slowdown from the revised 384,000 added in May and the lowest since the post-pandemic recovery, a report by the Labor Department on Friday showed. But it's still higher than the 275,000 increase predicted by economists, based on a FactSet survey.
The unemployment rate remained at 3.6%, with average hourly earnings up 0.3%, or 10 cents, the June jobs report showed.
Bitcoin (BTC) is down nearly 27% since the last jobs report in early June, and crypto markets continue to grapple with risk-off sentiment by investors as macroeconomic uncertainty persists.
Economists had expected a much bigger slowdown, suggesting that the labor market might be cooling off after the U.S. economy repeatedly added over half a million jobs on a monthly basis during the recovery of the Covid-19 pandemic. But the June data suggests that the jobs market is still very hot, and it will likely force the Federal Reserve to go through with another 75 basis-point (0.75 percentage point) rate hike – faster than the usual increment of 0.25 percentage point.
(Credit: Federal Reserve Bank of Kansas City)
The U.S. central bank has two responsibilities: price stability and maximum employment. With almost two jobs available for every person seeking employment, the latter is fulfilled.
The other, however, is a bigger challenge for the Fed with inflation still running at a four-decade high, more than quadruple the official target of 2%. Last month, the Federal Reserve had to raise interest rates by a hawkish 75 basis points.
Such accelerated rate hikes look likely for the coming months, as Fed Chair Jerome Powell has hinted at multiple times, and Friday's Employment Situation report will play a critical role in guiding central bankers.
“From the perspective of today, either a 50 basis point or a 75 basis point increase seems most likely at our next meeting,” Powell said at a conference following the central bank’s decision in June. “We anticipate that ongoing rate increases will be appropriate.”
Fed Governor Christopher Waller and St. Louis Fed President James Bullard are also in favor of 0.75 percentage point rate hike, they said during a webinar on Thursday.
Higher interest rates could potentially increase the unemployment rate, because companies might have to cut back on spending. Blockchain-focused companies including, BlockFi and Coinbase have announced layoffs. Non-crypto companies like Tesla and Netflix have also announced that they’ll be cutting jobs.
Powell has repeatedly said that he is not worried about the labor market negatively being impacted by rising interest rates. He even said that the labor market was “too hot,” while Kansas City Federal Reserve President James Bullard called it “sensational.”
“It’s our job to get it to a better place where supply and demand are closer together,” he said during a panel hosted by the International Monetary Fund in April.
View full text