+220000 Jobs in June; Record 153168000 Employed

Saturday, 08 Jul, 2017

USA job growth surged more than expected in June and employers increased hours for workers, signs of labour market strength that could keep the Federal Reserve on course for a third interest rate increase this year despite benign inflation.

Both the topline unemployment rate of 4.4 percent and the broader U-6 measure of 8.6 percent in June ticked up from May (by 0.1 percent and 0.2 percentage points, respectively), but the labor force participation rate also rose by 0.1 to 62.8 percent. The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.5 hours in June.

With these revisions, employment gains in April and May combined were 47,000 more than previously reported.

Economists have offered a variety of explanations for mild wage growth: low productivity, global competition, fewer middle-class jobs or a shift to a younger, lower-paid workforce from an older, higher-paid one.

Some strategists and economists are looking beyond the unemployment and monthly job gains numbers.

The average of 162,000 net new jobs a month so far this year is off last year's figure of 187,000. "While we may see the Fed trimming its balance sheet later this year, another rate hike is looking less likely".

Some of the strongest employment growth in June came in the fields of health care and social assistance, financial activities and mining. Loh said hourly earnings' 2.5 percent gain from a year earlier were disappointing, with growth slower than at the start of the year and mostly stagnant over the past several months. Despite the plunge in the unemployment rate during the recovery, there have been only scant signs of wage pressures.

During the presidential campaign, Trump criticized the declining unemployment rate (it had been 10 percent in October 2009) as not reflecting the true state of the economy. May's jobless rate was 4.3 percent.

"Historically, May employment is stronger when the survey week falls in the third week of the month as opposed to the second week", writes Michael Gapen, an economist at Barclays.

Wage growth also could strengthen the Federal Reserve's position that recent below-average inflation levels will not remain that way for the long term.

The Fed sees steady employment gains as further proof the economy has mostly healed from the Great Recession.

There were 5,326,000 Americans working part-time in June who would rather have a full-time job but cited economic reasons for not having such employment.