United States adds 213,000 jobs in June, unemployment rate jumps to 4%
Jul 10 2018
Despite the monthly setback, the current unemployment rate is nonetheless lower than the rate a year ago June when the jobless rate was 4.3 percent and 7 million people were unemployed.
The change in total nonfarm payroll employment for April was revised up from 159,000 to 175,000, and the change for May was revised from a gain of 223,000 to 244,000. Average hourly earnings rose 0.2% from the prior month - less than forecasts for the second straight 0.3% gain - while the jobless rate increased to 4% from 3.8%, the first rise in nearly a year.
An acceleration in pay increases could prompt the Federal Reserve to raise interest ratesmore sharply to head off a spike in inflation. In spite of healthy job growth, wage growth is especially weak in manufacturing, rising just 1.7 percent over the past year.
Employers in the United States are thought to have kept up their brisk pace of hiring in June, reflecting the durability of the second-longest USA economic expansion on record even in the face of a trade war with China.
"Wages could rise at a faster pace in the future as the economy is humming and the labour market is tight", said Sung Won Sohn, chief economist at SS Economics in Los Angeles.
Minutes of the Fed's June 12-13 policy meeting published on Thursday offered an upbeat assessment of the labor market. "It's probably relieving for the Fed". Economists say the effects could include companies curtailing both hiring and investment, which would have a cooling effect on the jobs figures in coming months.
The job numbers for the month of June indicate US manufacturing continues to gain momentum. This was consistent with sectoral data pointing to a more dynamic manufacturing sector among others. There were gains in professional and business services employment as well as leisure and hospitality. The retail industry's woes were also reflected in employment, as vendors cut 21,600 positions, the biggest drop since December.
"Leisure and hospitality" also registered a nice gain in jobs in the latest month, +25,000, led by "food services and drinking places", +16,000.
Several measures showed that the labour market still has slack to absorb.
Overall, unemployment inched up to 4 percent last month, largely due to the expanding pool of people actively seeking jobs.
Hassett pointed to the increase in labor force participation for African American women and Hispanic men and women as an encouraging sign that people are being drawn back to work. The central bank could stick to its plan to gradually increase interest rates.
Job openings are at record highs, meaning numerous job seekers are likely to find employment soon.
For the month of June, wages increased at a relatively solid annual rate of 2.7 percent. According to Bank of America Merrill Lynch, average hourly earnings growth of more than 0.4% from last month and payrolls of less than 140,000 would "spook" investors.