U.S. job growth strong in June despite darkening economic outlook

Unemployment rate holds steady at 3.6%; private employment back above pre-pandemic level

U.S. employers hired far more workers than expected in June and continued to raise wages at a steady clip, signs of persistent labor market strength that give the Federal Reserve ammunition to deliver another 75-basis-point interest rate hike this month.

The Labor Department's closely watched employment report on Friday also showed no indication that companies were reducing hours for workers. Also, the number of people working part time for economic reasons fell sharply, dropping below its pre-pandemic level. This should allay fears of an imminent recession that had mounted in recent days following a raft of tepid economic data, ranging from consumer spending to manufacturing.

"Today's job number should soothe fears of an imminent recession, but it does nothing to relieve fears of considerable further Fed tightening," said Seema Shah, chief global strategist at Principal Global Investors. "The job market remains severely tight."

Nonfarm payrolls increased by 372,000 jobs last month. Data for May was revised slightly down to show payrolls rising by 384,000 jobs instead of the previously reported 390,000. Employment is now 524,000 jobs below its level in February 2020.

The private sector has recouped all the jobs lost during the COVID-19 pandemic and is 140,000 higher than in February 2020, while government employment is still in the hole by 664,000.

Economists polled by Reuters had forecast 268,000 jobs added last month, with estimates ranging from as low as 90,000 to as high 400,000.

Last month's broad increase was led by the professional and business services industry, which added 74,000 jobs. Leisure and hospitality payrolls increased by 67,000 jobs. But employment in the industry remains down by 1.3 million since February 2020.