The unemployment rate fell to 3.6 percent in June as the economy added 209,000 jobs, solid gains following the Federal Reserve’s first pause of one of the fastest interest rate-hiking cycles the U.S. central bank has ever carried out.

Labor force participation held steady at 62.6 percent for the fourth month in a row, and the employment-population ratio also remained the same at 60.3 percent, the Labor Department said Friday. The labor force edged up to 166.95 million workers from 166.82 workers in May.

The big picture: Economy adds 209K jobs in June, unemployment at 3.6 percent

While some economists fretted that the 209,000 jobs added to the economy in June were the fewest since December 2020, many were encouraged by the report. The slight slowdown in job gains could be signs of a soft landing from the high inflation and rapid growth seen since the end of the COVID-19 recession.

Here are five things to know about Friday’s jobs numbers from the Labor Department.

Jobs gains in April and May were revised down

While the economy added 209,000 jobs overall, only 149,000 were added in the private sector, amounting to what some economists considered very moderate gains.

The job numbers for April and May were also revised down by 110,000 jobs, revealing that an apparent May hiring boom was less powerful than first reported.

The sectors that added the most workers were private education and health services at 73,000, health care and social services at 65,000 and government at 60,000.

Now hiring: These industries added the most jobs in June

The most dynamic part of the labor force remained in services, which added a total of 120,000 jobs, while goods-producing industries added only 29,000 jobs.

Wage growth accelerates

Average hourly earnings for employees rose by 12 cents, or 0.4 percent, to $33.58, the Labor Department reported.

That’s good news for workers, many of whom have seen their paychecks eroded by high inflation during the recovery. Over the last three months, average hourly earnings rose at a 4.6-percent annual rate and outpaced the annual inflation rate in June of 4 percent.

Labor costs are the largest component of prices, even though the current inflation is caused more by elevated profits and higher markups than by labor costs. This makes some economists view positive wage growth negatively, especially as the Fed attempts to curb inflation.

Faster wage growth could mean more Fed rate hikes

The Fed deals with rapid price growth by boosting interest rates, as it lacks the power to levy windfall profit taxes, enact targeted price caps or impose other measures floated by economists.

Higher borrowing costs tend to reduce lending and investments throughout the economy and makes companies more keen to shed workers or halt hiring.

The state of play: Fed pauses rate hikes, but hints toward future increases

While other countries simply reduce the number of hours that employees work in order to reduce private-sector labor costs, interest rate hikes in the U.S. often translate simply to people losing jobs.

Even so, the job market has held strong throughout the Fed’s rapid hiking cycle. Prices have been coming down even as rates have been going up and employment levels have remained high, thanks largely to pandemic-driven forces behind inflation easing.

The Fed expects to raise rates two more times this year, and the 0.4-percent increase in the June wage level could mean these additional hikes could come sooner rather than later.

“Today’s report provides no reason to dissuade the Fed from hiking the federal funds rate in its upcoming July meeting,” wrote Preston Caldwell, economist with rating company Morningstar.

“If job growth (and other measures of economic activity) remains at current rates and inflation proves stubbornly high, then another hike in September is possible,” he wrote.

Black unemployment spikes upward

Due to the legacy of slavery and systemic inequality, Black workers on the lower end of the earning spectrum can have some of the most precarious employment situations and be the first to lose their jobs during economic slowdowns.

The June jobs reported showed a spike in the level of Black unemployment, rising to 6 percent from 4.7 percent in April. Some market commentators think of this demographic as a “canary in the coal mine” for potential job losses throughout the economy.

Flashback: Black unemployment is at a record low — but ‘horrible’ work conditions still ensnare many

“The St. Louis Fed monitors conditions for vulnerable workers, many of whom are the ‘first fired’ and ‘last hired’ in economic downturns and expansions, respectively. Among these workers, there has been a gradual increase in unemployment rates among Black men and women and young workers over the past four months,” William Rodgers, vice president and director of the St. Louis Fed’s Institute of Economic Equity, wrote in an analysis Friday.

“The increase in unemployment for these vulnerable workers appears to be driven by difficulty finding a job among existing workers, rather than a meaningful entry of previously sidelined workers,” he added.

People who could only find part-time work jumped

Friday’s report also showed a marked rise in people working part-time due to economic conditions, increasing by 452,000 to 4.2 million in June.

This reflects “an increase in the number of persons whose hours were cut due to slack work or business conditions,” the Labor Department said.

People who could only find part-time work increased to 948,000 from 824,000 in May, while people working part time due to generally anemic business conditions increased to 2.9 million from 2.6 million in the previous month.