Hiring powers increase in US jobs
Print Edition
US job growth surged in June as factories and retailers boosted hiring, confirming the economy has regained speed after a first-quarter lull, but tepid wage growth could see the Federal Reserve still cautious about hiking interest rates.
Non-farm payrolls increased by 287,000 jobs last month, the largest gain since last October, the Labor Department said yesterday. May payrolls were revised down to show them rising 11,000 rather than the previously reported 38,000.
“It’s a great number. This affirms the economy is still on decent footing but it doesn’t change the Fed’s path,” said Darrell Cronk, chief investment officer at Wells Fargo Wealth and Investment in New York.
Last month’s tally beat economists’ expectations for an increase of only 175,000 jobs. While the unemployment rate rose two-tenths of a percentage point to 4.9 percent, that was because more people entered the labor force, a sign of confidence in the jobs market.
Wage growth remains sluggish even as the labor market tightens. Average hourly earnings increased only 2 cents or 0.1 percent in June. The year-on-year gain in earnings rose to 2.6 percent after advancing 2.5 percent in May.
The strong rebound in June payrolls added to data on consumer spending and housing in suggesting that economic growth accelerated from the first quarter’s anemic 1.1 percent annual rate. The Atlanta Fed is currently forecasting the economy growing at a 2.4 percent pace in the second quarter.
But the signs of strength in the economy precede Britain’s stunning vote last month to leave the European Union.
Given the Fed’s desire to wait on more data to assess the economic impact of the so-called Brexit, the employment report probably has little impact on the near-term outlook for interest rates.
The Brexit referendum on June 23 roiled financial markets, raising fears that sustained volatility might negatively impact companies’ hiring and investment decisions. Economists have also warned that slower growth in Europe and a stronger dollar could weigh on the US economy.
Minutes of the Fed’s June 14-15 meeting published on Wednesday showed that officials “agreed that ... it was prudent to wait for additional data on the consequences of the UK vote.”
The Fed raised rates in December for the first time in nearly a decade, but markets now expect no further increase this year.
Manufacturing employment increased 14,000 last month after shedding 16,000 jobs in May. The retail sector added 29,900 jobs, and the leisure and hospitality sector gained 59,000 jobs.
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