The US labor market showed fresh signs of resilience on Thursday, as private hiring surged, layoffs slowed and filings for unemployment benefits stayed relatively low.
US companies added almost half a million jobs last month, the most in over a year, according to data from ADP Research Institute in collaboration with Stanford Digital Economy Lab. A separate report from Challenger, Gray & Christmas Inc. showed announced job cuts by US employers fell in June to an eight-month low.
While the ADP data often differ from the government’s employment report, which is due Friday, the figures are still consistent with a broader trend of a labor market that’s barely cooling.
That was also evident in the latest report on job openings. Vacancies declined in May — unwinding much of an April surge and indicating labor demand and supply are coming more into balance. The quits rate, however, rose by the most in nine months, indicating workers still feel confident in their ability to secure another job.
“The labor market isn’t always going to be this strong. Recessions happen,” Nick Bunker, research director at Indeed Hiring Lab, said in a note. “But today’s data and data from the past several months continue to make a soft-landing scenario increasingly likely.”
Treasury yields surged and the S&P 500 slumped following the reports, which will likely further solidify the case for the Federal Reserve to raise interest rates at its meeting later in July, following last month’s tenuous decision to pause after 10 straight increases. The broader question is whether strength in hiring will endure, or if the figures represent a last gasp amid other signs of a cooling economy.
“We expect payrolls to remain positive for now,” Rubeela Farooqi, chief US economist at High Frequency Economics, said in a note. “But a deceleration is likely as the lagged and cumulative effects of monetary policy filter through more broadly through the economy.”
Meanwhile, weekly filings for jobless benefits rose by 12,000 to 248,000, according to the Labor Department. While that was more than forecast, the figure is still below June’s peak of 265,000, which was the highest since 2021.
Continuing claims, a proxy for the number of Americans receiving those benefits, fell to the lowest level since February.
Separate data Thursday showed the US service sector expanded in June to a level above all forecasts. The Institute for Supply Management’s services employment index showed the strongest growth in four months.