The big boost in hiring in June alleviates fears that the US economy is sputtering.
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“For sure, today’s data add to scope for interest rates to be nudged higher before the year is out”.
The Fed raised rates in December for the first time in almost a decade, but markets now expect no further increase this year. 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 United Kingdom on whether it should leave the European Union. That would be a massive rebound from May when the USA added a mere 38,000 jobs. May’s numbers were depressed by the same Verizon strike that inflated June’s figures, but even so, May stands as one of the worst months of the recovery. Those workers will be counted as “new” jobs under the Labor Department’s rules, so economists and traders will be looking for job gains over 135,000. “With job creation as strong as it was in June, it’s not surprising that more people now feel like looking for paychecks”.
Food services and drinking place employment was up by 22,000.
The unemployment rate for the month increased to 4.9% which was above its previous 4.7% and a little higher than the consensus estimate at 4.9%.
“The June jobs report is the kind we want to see more of”, Elise Gould, an economist with the Economic Policy Institute, writes in an e-mailed statement. Mining is the only sector that’s still struggling: 211,000 mining jobs have been lost since September 2014, largely because of super cheap gas prices. Average hourly earnings were up 2.6% over the 12 months ending in June. Wage growth picked up to 2.6%.
Economists say wage growth of between 3.0 percent and 3.5 percent is needed to lift inflation to the Fed’s 2.0 percent target. The June increase in part reflected the return of the 35,000 striking telecommunication workers in May. 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. The manufacturing workweek remained unchanged at 40.7 hours. But here’s the takeaway for voters: The June jobs report gives us a sense that the USA economy remains reasonably stable in the face of financial markets volatility and the prospect of further headwinds blowing ashore from overseas.
Andrew Hunter, assistant economist at Capital Economist, said the latest jobs figures could bring forward the time when the Fed might act. “The Fed will nearly certainly remain on hold at the 26 to 27 July meeting”. And there were 219,800 (17.8%) more trucking jobs in May than were reported in March 2010, the low point in the economic downturn.
Concerns about the global economy have deepened since the U.K.’s Brexit vote.
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The May total was revised down to 11,000 from the original 38,000.
