The job market is cooling but still strong. Is that a good thing?

A ‘Now Hiring’ sign is displayed outside a check cashing shop in Los Angeles on June 2, 2023. Employers added 209,000 jobs last month, slowing down from previous months but still marking respectable growth.

Mario Tama/Getty Images

The country’s job market is finally showing signs of cooling – but it may still be a tad too strong.

That may sound strange. In a traditional economy, a strong labor market would usually be a good thing, but it’s not so positive in an economy that continues to struggle with high inflation.

U.S. employers added 209,000 jobs in June, according to data out on Friday. That’s below the pace of recent months but it’s still a very solid number.

And the overall labor market remains tight, with the unemployment falling to 3.6%, low by historic standards. Meanwhile, wages also continue to rise, increasing at an annual rate of 4.4%.

Here are some key takeaways from the Labor Department’s June jobs report:

The jobs engine is shifting down

It may be a slowdown, but any month when the U.S. economy adds more than 200,000 jobs is a solid gain.

In fact, the economy may need the labor market to slow down further to help bring down inflation.

There are some signs that’s happening. June’s employment increase was the smallest since December 2020.

Job gains for April and May were also revised down by a total of 110,000 jobs.

In the first six months of this year, monthly job growth averaged 278,000 jobs — a significant downshift from the previous six months when employers were adding an average of 354,000 jobs every month.

But all in all, this is still a strong jobs market.

Why the labor market is still so solid

The resilience of the job market has surprised many economists…