US inflation and weak hiring keep households and businesses on edge

Washington,UPDATED: Jul 4, 2026 20:16 IST

Economic concerns remained at the centre of public attention in the US over the past week, with inflation, jobs and borrowing costs shaping how households and businesses are making decisions. Higher prices at grocery stores and petrol stations are still weighing on people, even as some recent data points showed limited relief.

The broad picture from the latest figures is mixed. Consumer confidence improved only slightly, hiring slowed sharply in June and companies appeared cautious about the economy. At the same time, applications for jobless aid stayed low, mortgage rates eased to their lowest level in seven weeks and job openings remained stronger than expected, pointing to a labour market that is holding up but is not especially strong.

Americans' views on the economy improved a little in June as petrol prices declined, but sentiment remained weak by historical standards. The Conference Board said its consumer confidence index rose by 0.6 points to 91.2 in June, still below 95.2 a year earlier. After the Iran war pushed up oil and gas prices, inflation quickened and inflation-adjusted incomes fell. Before the pandemic, the index regularly stood above 120, suggesting confidence is recovering only slowly from that shock.

Fresh labour market data also showed that US employers cut back on hiring in June. The Labour Department said employers added 57,000 jobs last month, less than half the total recorded in May. The unemployment rate fell to 4.2 per cent from 4.3 per cent in May, but much of that decline came because many out-of-work people stopped looking for jobs and were no longer counted as unemployed. The figures indicate that employers remain wary as inflation is at a three-year high and consumer confidence is near post-pandemic lows. Earlier job gains first reported for April and May were also revised down.

Even so, layoffs remained relatively limited. The Labour Department said applications for unemployment benefits for the week ending June 27 fell by 1,000 to 215,000. That was lower than the 225,000 forecast by analysts surveyed by FactSet. The four-week moving average, which smooths out weekly fluctuations, fell by 2,500 to 222,000. Weekly jobless claims are closely watched because they offer a near real-time view of the health of the jobs market.

There was some relief for homebuyers as the average long-term US mortgage rate fell to its lowest level since mid-May. Mortgage buyer Freddie Mac said the average rate on a 30-year fixed mortgage slipped to 6.43 per cent from 6.49 per cent last week. A year ago, the average rate was 6.67 per cent. The rate has largely stayed around 6.5 per cent in the months since the war between the US and Iran began in late February and disrupted crude oil flows from the Persian Gulf, pushing up oil prices, inflation, bond yields and mortgage rates.

Separate data showed that job openings remained unexpectedly firm in May. Employers advertised 7.6 million openings, above forecasts of 7 million, according to figures released by the Bureau of Labour Statistics. Still, the market was steady rather than booming. Layoffs rose in May and the number of people leaving jobs voluntarily, seen as a sign of confidence, edged up only slightly. Hiring also weakened, with gross hiring falling to 5.17 million in May from 5.26 million in April. By comparison, during the stronger period from mid-2021 to mid-2023 after COVID-19 lockdowns, monthly hiring regularly exceeded 6 million.

Overall, the latest US economic data showed some signs of resilience, especially in low jobless claims and solid job openings, but also pointed to caution among consumers and employers. Inflation and higher living costs continue to shape the outlook, while modest easing in mortgage rates has offered only limited relief.

With PTI Inputs

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