The latest jobs report came out significantly above market expectations, indicating the economic slowdown is not nearly as bad as some have been assuming.

On Friday the Labor Department reported non-farm payrolls were up by 372,000 last month. Bloomberg economists had forecasted they would have risen by 268,000, significantly less than the actual number. Unemployment was steady at 3.6%, only slightly above the pre-pandemic norm of 3.5% in February of 2020. Employment rose across all segments of the economy, including service and goods-producing sectors.

Investors had been afraid the economy was beginning to cool already as consumer sentiment declined and retail businesses reported large declines in earnings. In addition the Fed had committed to an aggressive series of interest rate hikes to try and rein in inflation. This blowout jobs report would seem to indicate hiring is still strong, and the economy is still quite active. It also increases the possibility the Fed will be able to raise rates aggressively to tame inflation, without crushing employment, allowing for the soft landing for the economy they have been hoping to achieve.

Analysts immediately reacted with statements on the new numbers.

Andrew Hunter, senior U.S. economist, Capital Economics said, “The strong 372,000 gain in non-farm payrolls in June appears to make a mockery of claims the economy is heading into, let alone already in, a recession. That may be enough to solidify the case for another 75bp rate hike at the Fed’s meeting later this month…”

Joe Brusuelas, principal and chief economist, RSM US LLP said, “When the economy goes into a recession, it doesn’t do it slowly — it tends to fall off a cliff. Economies in recession don’t add 375,000 jobs per month on a three-month moving average and you don’t get a 372,000, one-month increase…”

Comerica Bank Chief Economist Bill Adams gave a more nuanced analysis, saying, “High inflation and a shift of consumer spending from goods to services is causing job losses in some sectors of the economy, but most workers who are losing jobs are finding new ones quickly. Employment in non-depository credit intermediation, which includes non-bank mortgage lenders, fell 9,300 in June. And while retail employment was up on the month, it is still down 50,000 from its peak in February.”