Economic data released during the week presented a mixed picture of the American labor market and consumer sentiment, with several indicators pointing to business restraint despite some modest improvements.
Consumer confidence rose modestly as gas prices declined, with the Conference Board reporting its consumer confidence index increased 0.6 point to 91.2 in June. However, this figure remained below the year-ago reading of 95.2, underscoring persistent pessimism among households. Consumers have faced elevated costs at grocery stores and gas stations compared with the prior year, while inflation remains elevated. The Conference Board attributed recent weakness to disruptions from the Iran war, which caused oil and gas prices to spike and accelerated inflation. Prior to the pandemic, the index regularly exceeded 120, indicating how far current readings remain from historical norms.
Employment growth decelerated substantially in June, with U.S. employers adding only 57,000 jobs, representing less than half the previous month’s total. The Labor Department reported that the unemployment rate declined to 4.2% from 4.3% in May, though the improvement stemmed primarily from workers dropping out of the labor force rather than finding employment. Additionally, previously reported job gains for April and May were revised downward. These figures reflected company caution regarding economic conditions, with inflation at a three-year high and consumer confidence near post-pandemic lows.
Other labor market indicators provided a more stable picture. Weekly jobless claims fell by 1,000 to 215,000 for the week ending June 27, coming in below analyst forecasts of 225,000. The four-week moving average of claims declined by 2,500 to 222,000. Meanwhile, job openings remained surprisingly robust at 7.6 million in May, exceeding forecaster expectations of 7 million openings. However, actual hiring activity remained constrained, with gross hiring falling to 5.17 million in May from 5.26 million in April, well below the 6 million monthly average seen during the strong hiring period from mid-2021 to mid-2023.
Mortgage rates provided some relief to prospective homebuyers, as the average 30-year fixed rate fell to 6.43% from 6.49% the previous week. The decline reflected broader market movements since the Iran war began in late February, which disrupted crude oil flows and contributed to elevated inflation and bond yields.
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