AILSA CHANG, HOST:
The heartbeat of the U.S. economy is the job market. And today, we learned that heartbeat slowed down a bit last month. Is it just settling into a healthy rhythm, or is there something more worrisome going on? NPR's Scott Horsley joins us now to help us answer that question. Hey, Scott.
SCOTT HORSLEY, BYLINE: Hi, Ailsa.
CHANG: OK, so the monthly jobs report is kind of a pulse check on the economy, right? So what is it telling us this time?
HORSLEY: It's kind of a mixed signal, really. U.S. employers added 206,000 jobs last month, which is a little stronger than forecasters expected. But there are some signs of softening. Updated figures show employers added fewer jobs in both April and May than had been reported. Temporary help companies also cut almost 50,000 jobs last month, and that's worth keeping an eye on because temps are often the first ones let go when business slows down.
CHANG: Right.
HORSLEY: Today's report also shows that employers aren't having to pay quite as much to find new workers. Average wages in June were up just 3.9% from a year ago. Economist Sarah House of Wells Fargo notes that's the smallest annual increase in three years.
SARAH HOUSE: I think it does paint a picture of a jobs market that continues to weaken.
HORSLEY: Wages are still growing faster than prices, but House says those shrinking raises might make some workers more cautious about spending, and, in fact, that's exactly what the Federal reserve has been trying to achieve with its high interest rates.
CHANG: Wait, so this slower heartbeat for the job market is something the Federal Reserve wants to hear?
HORSLEY: Up to a point, yes. For almost a year now, the Fed's been keeping interest rates at their highest level in more than two decades all in an effort to tamp down demand, cool off the job market and bring inflation under control. The challenge, though, for the Central Bank is knowing when the pulse has slowed just enough to a nice sustainable resting pace and not so much that the economy slips into cardiac arrest.
CHANG: So to speak - OK, well, how's the Fed doing with that balancing act?
HORSLEY: So far, OK - inflation's fallen by about two-thirds from its peak, and so far, the job market has not caved in. The unemployment rate is creeping up, though. It was 4.1% in June, still low by historical standards but the highest it's been in more than 2.5 years. Fed Chairman Jerome Powell was speaking on a panel in Portugal earlier this week and said, he and his colleagues are keeping a close eye on the job market for any signs it might be in trouble.
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JEROME POWELL: We said that if we saw the labor market unexpectedly weakening, that could - is also something that could call for a reaction.
HORSLEY: And by reaction there, he - Powell means a cut in interest rates. Now, the Fed doesn't want to cut interest rates too quickly and risk rekindling inflation, but it also doesn't want to wait too long and risk a bigger jump in unemployment. Right now, investors are betting that the Fed will see its way clear to making its first cut in interest rates this fall.
CHANG: OK, so the number of jobs is still growing, although at a slower pace. How about the number of workers? Are they keeping up with the growing jobs out there?
HORSLEY: Yeah, the workforce is still growing. In fact, one reason unemployment inched up last month is that almost 300,000 new people joined or rejoined the job market. And month after month, a lot of those new workers are immigrants. Since the pandemic, the foreign-born workforce has grown about three times as fast as the native-born workforce. Jason Furman, who was a top economist in the Obama White House, says it's largely thanks to those hardworking immigrants that the economy has been able to keep growing the way it has.
JASON FURMAN: If we didn't have immigrants in this country, the workforce would actually be shrinking. We would lose jobs every month, and economic growth would be very low.
HORSLEY: And the reason for that is simple demographics. You know, we have an aging population. A lot of baby boomers are retiring every day. If it weren't for immigrants, the U.S. economy would look more like other aging countries like Japan. Importantly, immigrant workers are not crowding out native-born workers. In fact, if you look just at people in their prime working years, more of them are in the workforce now than at any time in more than two decades.
CHANG: That is NPR's Scott Horsley. Thank you so much, Scott.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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