Economists have been reporting signs that the odds for a recession in the next year might be rising, but the jobs market is not getting the memos.
On Friday, the U.S. Bureau of Labor Statistics reported that the nation gained 372,000 jobs from May to June after seasonal adjustments and the unemployment rate was 3.6% in June, unchanged since March after seasonal adjustments and down from 5.9% in June 2021.
“The jobs report impressed yet again in June,” NAFCU Senior Economist Curt Long said. “Job gains surpassed expectations and the number of those forced to work part-time due to economic reasons fell sharply.”
The report showed a drop in labor force participation, but Long said it is likely a fluke because labor demand is still high and recessionary fears are growing.
“A recession may yet come, but the labor market is pushing hard in the other direction,” he said.
The nation had a seasonally adjusted 152.7 million non-farm jobs in June, down by 524,000, or 0.3%, from its pre-pandemic level in February 2020. Unemployment was only slightly higher than its 3.5% level in February 2020.
CUNA Chief Economist Mike Schenk said the month’s job gains were in line with its economists’ expectations, and the 3.6% 12-month gain in average hourly earnings was consistent with the previous two months.
“Obviously, a tight labor market increases the threat of a wage-price spiral, but these more modest wage increases in the past several months suggest policy makers may dodge that bullet,” Schenk said. “Nothing in the report suggests the Federal Reserve will waver from its commitment to aggressively raise rates in an effort to tamp down inflation expectations.”
Joel Kan, assistant vice president of economic and industry forecasting for the Mortgage Bankers Association, said job gains in the first half of the year have averaged 450,000 jobs per month, “which is an extremely robust pace by historical standards.”
“This labor market strength comes despite other economic data showing signs of weakening and a higher probability of a recession,” Kan said. “With the Federal Reserve intently focused on bringing down inflation, we expect this will not alter near-term expectations for another 75-basis-point rate hike at the next FOMC meeting.”
Kan said the housing market continues to suffer from a low supply of homes for sale, as material and labor costs remain elevated. “The strong labor market is still a positive for the housing market, but overall demand has cooled from the recent jump in mortgage rates, high home prices and rising economic uncertainty,” he said.
Cox Automotive on Friday reported the automotive market continued to show weakness in June.
Cox Automotive estimated retail sales of used cars rose 5% from May to June, but were down 13% from June 2021 and down 11% from June 2019. Used car dealers ended June with 48 days of supply, which was unchanged from May but higher than the 39-day supply at the end of June 2021.
June’s new-light-vehicle sales were down 13.5% year over year, but up 1.7% from May. The June seasonally adjusted annual rate came in at 13.0 million, a 16% decline from last year’s 15.5 million SAAR, but up 2.3% from May’s 12.7 million pace.
The Conference Board Consumer Confidence Index fell 4.4% in June when a larger decline had been expected, but the May index was also revised down. Plans to purchase a vehicle in the next six months increased, but remained down year over year.