The Friday numbers from the Labor Department showed the unemployment rate increasing to 4.1 percent in June from 4 percent in April, the third consecutive month of 0.1-percentage point increases.

Jobs added to the economy in May were revised down to 218,000 from 272,000, and in April to 108,000 from 165,000.

The Fed hiked its baseline interest rate range up to between 5.25 percent and 5.5 percent last summer and has kept it at that level to bring inflation back down to its 2 percent annual goal. High interest rates are meant to fight inflation by sapping energy from the economy and forcing businesses to keep prices stable.

“Several participants specifically emphasized that with the labor market normalizing, a further weakening of demand may now generate a larger unemployment response than in the recent past when lower demand for labor was felt relatively more through fewer job openings,” read the minutes of the Fed’s June federal open markets committee meeting, which were released this week.

In May, the number of job openings for every unemployed person held steady at 1.25, down from its high point of two open jobs for every job seeker in 2022.

Wage growth decelerated in June, advancing by 10 cents to $35.00 an hour after advancing by 15 cents in May. On an annual basis, wages grew by 3.9 percent in June, which is still above inflation but down from 4.1 percent in May. Wage growth has generally been declining since it hit 5.9 percent in March 2022.

Wage growth for nonmanagers has decreased at a faster pace, falling from a 7-percent annual increase in 2022 to 4 percent in June.

As wage and employment have cooled, so has inflation. The consumer price index (CPI) decreased in both April and May, though it stands above the Fed’s target range at 3.25 percent.

Employment readings in the ISM services report fell well below expectations in June, falling below the May numbers by a full 5 percentage points.

“June Services [levels] indicates the overall economy is contracting for the first time in 17 months,” ISM’s Steve Miller wrote in an analysis.

The Hill’s Tobias Burns has more here.