BNR – Recently, job growth in the United States decelerated. It is an indication that the impact of rising interest rates is beginning to weigh on the country’s economy.
According to the Labour Department, employers created 209,000 positions in June, the weakest growth in over two years. Although this was less than predicted, the jobless rate decreased to 3.6%, a decrease from 3.7% in the previous month.
The labour market is being keenly monitored as the US Federal Reserve raises borrowing prices to combat inflation. Despite the Federal Reserve’s target interest rate rising to over 5% in less than a year, hiring continues to be solid.
US Labour Market Decelerates
It was accurate in June when experts said the 209,000 jobs created were ample to meet labour-force progress, though being the lowest level since December 2020. Salaries have also risen, with the standard hourly wage up 4.4% from a year earlier.
However, the monthly report comes with other statistics indicating that the labour market may be slowing. One example of such statistics is the decrease in employment openings.
“Today’s jobs report is slightly weaker than many expected,” said Richard Flynn, managing director at Charles Schwab UK. “The labour market remains tight, but investors will likely interpret these numbers as a sign that cracks are beginning to emerge.”
For months, experts have predicted a slowdown. Rising interest rates drive customers to reduce other expenditures. Also, they make financing for company growth more expensive.
However, job growth has frequently surpassed predictions. ADP, the private payrolls processor, also released a solid recruiting report earlier this week, raising hopes for another round.
Interest Rates May Rise Again
The ADP results caused a share sell-off on Thursday, as investors changed their wagers based on how far interest rates may rise.
The Labour Department data, on the other hand, offered a somewhat distinct image, with government and healthcare businesses driving employment in June.
Retailers and transport companies shed employment, while entertainment and hospitality companies created just 21,000 jobs.
Analysts believe the US Federal Reserve will raise interest rates again at its meeting later this month. In the United States, inflation has declined dramatically since last year, to 4%. It is, nevertheless, larger than the Federal Reserve’s 2% objective.
