US economy exceeds expectations to add 287,000 jobs
Figure comes after two months of disappointing job growth
Unemployment climbs to 4.9%, labor department says
The US economy added 287,000 jobs in June – exceeding expectations after two months of disappointing job growth.
The unemployment rate went up to 4.9%, the Department of Labor announced on Friday.
Economists polled by Reuters had expected 175,000 jobs to be added in June and the unemployment rate to go up to 4.8% – up from 4.7% a month ago.
Friday’s report comes just days after the Federal Reserve released notes from its June meeting. In June, the US central bank decided for the fourth time this year not to raise US interest rates.
In December, the Fed raised rates for the first time in almost a decade. June’s decision to hold off on raising interest rates from the current range of 0.25% to 0.5% was attributed to slowing job growth and the then upcoming vote by the UK on whether it should leave the European Union.
May’s initial jobs report found that the US economy had added a meager 38,000 jobs – about 122,000 fewer than expected. The disappointing number was blamed on the 44-day strike by 40,000 Verizon workers, most of whose jobs are subtracted from the total while they are on strike. The strike finished at the end of May.
Despite expectations of upward revisions, on Friday, the Department of Labor revised May’s figure from 38,000 jobs to 11,000.
“The employment gain in June was hefty, but it follows a very weak May and was not confirmed by strength in the household survey. Job growth in the quarter averaged just 151,000,” said Chris Low, chief economist at FTN Financial. “From here, we need to see further gains in manufacturing and construction as well as broader gains in services – growth in healthcare and leisure alone won’t cut it – before we are comfortable calling a turn for the better in the employment trend.”
Last month, the leisure and hospitality industry added 59,000 jobs and healthcare added 39,000 jobs. However, mining continued to lose jobs. In June, the industry lost another 6,000 jobs. Since its peak in September 2014, mining has lost 211,000 jobs, according to the Department of Labor.
In June, hourly earnings went up by 2 cents to $25.61 an hour. The annualized rate of wage growth for the past 12 months has reached 2.6%. Ea
The Fed was also concerned about the number of part-time workers.
“The share of workers employed part time for economic reasons rose noticeably in May,” according to the notes from June’s meeting. The number of those who wanted full-time jobs but were only able to find part-time jobs was 5.8m in June, down from 6.4m in May, just barely offsetting the increase in involuntary part-time labor the month prior. “Although the rate of private-sector job openings remained elevated, the rate of hires declined in both March and April and the rate of quits was unchanged.”
A high number of Americans leaving their jobs means that they are confident they can find a new job and are optimistic about the US jobs market: The number of people quitting their jobs was 828,000 in June, slightly up from 796,000 in May.
The job growth rebound recorded in June might be enough to assuage the Fed’s fears about the weakening job market, according to Jim O’Sullivan, chief US economist at High Frequency Economics.
“Today’s report helps the case for more Fed tightening before too long – if strength is sustained – although officials are being ultra cautious amidst turmoil in global markets,” he said on Friday. “The Fed will almost certainly remain on hold at the 26 to 27 July meeting.”
Despite the positive job growth, Ian Shepherdson, chief economist at Pantheon, advised caution in the coming months. The June report reflected pre-Brexit vote data, he noted.
The UK’s decision to leave the European Union “will hurt manufacturing exporters”, he said, adding that the jobs report had a margin of error of more than 100,000 jobs and “could be revised down substantially” next month.