The United States economy featured mixed results last month as 850,000 jobs were added, according to the Labor Department’s jobs report on Friday, but the unemployment rate rose slightly to 5.9%.
Despite the rise in unemployment, several key economic indicators have shown progress in recent weeks. Consumer confidence is reportedly at its highest point since the onset of the pandemic last year. Stocks closed out the first half of the year at record highs and businesses’ plans for capital investment are rising.
“I think it’s a very solid and strong report and very encouraging that we’re seeing over the last few months continued increase in the net job creation,” Kathy Bostjancic, chief U.S. financial economist for Oxford Economics told The New York Times. Bostjancic noted that the totals fell below the one million mark that the Federal Reserve chair, Jerome H. Powell, has said he would like to see, but added that “the momentum is moving in the right direction.”
MarketWatch reported that Fed officials have stated a clear preference for starting reduce the pace of asset purchases soon. If job growth stays at current pace, the economy could create 3.5 million jobs before the Fed “takes its foot off the gas.”
Inflation has risen at a faster-than-expected clip this year and many economists think the Fed should taper its asset purchases so that it doesn’t have to “slam the brakes on economic growth and risk a recession in order to contain inflation,” MarketWatch noted.
Gregory Daco, chief U.S. economist at Oxford Economics agreed with Gapen that the Fed would signal a taper in August.
“While today’s report was shy of the coveted 1-million mark, it paints a picture of a steadily recovering jobs market. With further progress toward the Fed’s dual mandate likely over the summer, we anticipate a Fed tapering announcement at the Jackson Hole Symposium in August,” Daco said, in a note to clients.
The largest gains continued to occur in the leisure and hospitality sector, which represented nearly half of June’s job additions. The education sector also had an uptick in hiring last month.
Governors in 26 states ended distribution of federal pandemic-related jobless benefits even though they are funded until September, arguing that the assistance — including a $300 weekly supplement — was discouraging people from returning to work. Some economists have noted this could lead to better job gains in July.