U.S. Economy Added 372,000 Jobs in June, Defying Slowdown Fears

The U.S. economy powered through June with broad-based hiring on par with recent months, keeping the country clear of recession territory even as inflation eats into wages and interest rates continue to rise.

Employers added 372,000 jobs, the Labor Department reported Friday, and the unemployment rate, at 3.6 percent, was unchanged from May and near a 50-year low.

Washington and Wall Street had keenly awaited the new data after a series of weaker economic indicators. The June job growth exceeded economists’ forecasts by roughly 100,000, offering some reassurance that a sharper downturn isn’t underway — at least not yet.

But the strength of the report, which also showed bigger wage gains than expected, could give the Federal Reserve more leeway for tough medicine to beat back inflation. Now, all eyes will be watching whether the Fed’s strategy of raising interest rates pushes the country into a recession that inflicts harsh pain.

Employment growth over the last three months averaged 375,000, a solid showing though a drop from a monthly pace of 539,000 in the first quarter of this year. Employers have continued to hang on to workers in recent months, with initial unemployment claims rising only slightly from their low point in March.

The private sector has now regained its prepandemic employment level — an achievement trumpeted by the White House on Friday — though the level is still below what would have been expected absent the pandemic. Other than the public sector, no broad industry lost jobs in June, on a seasonally adjusted basis.

“We’ve essentially ground our way back to where we were pre-Covid,” said Christian Lundblad, a professor of finance at the Kenan-Flagler Business School at the University of North Carolina. “So, this doesn’t necessarily look like a dire situation, despite the fact that we’re struggling with inflation and economic declines in some other dimensions.”

Strong demand for workers is also evident in the 11.3 million jobs that employers had open in May, a number that remains close to record highs and leaves nearly two jobs available for every person looking for work. In this equation, any workers laid off as certain sectors come under strain are more likely to find new jobs quickly.

The Labor Department’s broadest measure of labor force underutilization — which includes part-time workers who want more hours and people who have been discouraged from job hunting — sank to its lowest rate since the household survey took its current form in 1994, a sign that employers are maximizing their existing work force as hiring remains difficult.

Employment in service-providing industries led the June gains, in line with a pullback in goods spending as consumers shifted toward experiences that they had to forgo while public health restrictions remained in place. Leisure and hospitality businesses, still catching up to prepandemic employment levels, added 67,000 jobs.

Government employment was an exception to the…