Employers add 213K jobs in June as hiring stays strong
Employment growth was strong for a second consecutive month in June as the economy added 213,000 jobs despite worker shortages and mounting U.S. trade tensions.
The unemployment rate, which is calculated from a separate survey, rose from an 18-year low of 3.8 percent to 4 percent as 600,000 Americans, including many discouraged workers on the sidelines, streamed into a favorable job market, the Labor Department said Friday.
Economists expected 195,000 payroll gains, according to a Bloomberg survey.
Many experts have expected job gains to slow because the low employment rate is making it harder for firms to find workers. Also, President Donald Trump has slapped tariffs on imports that have provoked tit-for-tat countermeasures by other countries in an escalating trade war that’s starting to unnerve U.S. corporations.
But before Friday’s report, monthly additions have averaged about 200,000 this year. And Goldman Sachs says the tight labor market tends to boost hiring in June as companies aggressively target students and graduates.
❚ Wage growth holds steady: Average hourly earnings increased 5 cents to $26.98, keeping the annual increase unchanged at 2.7 percent. Pay raises haven’t picked up as much as anticipated in light of the historically low jobless rate, but economists expect annual gains to reach 3 percent by year-end.
An acceleration in pay increases could prompt the Federal Reserve to raise interest rates more sharply to head off a spike in inflation. The unchanged 2.7 percent rise in June helps keep the Fed on a gradual path of rate hikes.
❚ Breakdown: Employment gains were broad-based as the private sector added 202,000 jobs, and federal, state and local governments added 11,000. Education and health care led the gains with 54,000. Retailers, however, cut 22,000 jobs as the sector continues to grapple with a shift from physical stores to online shopping.
❚ Labor force grows: The 601,000 increase in the labor force – made up of people working and looking for jobs – overwhelmed the additional 102,000 who were employed, according to the household survey. That’s what caused the unemployment rate to rise to 4 percent, the highest level since March.
But the gain in the labor force is good news because it means more Americans on the margins are being drawn into a job market that’s providing more opportunities for workers. The portion of Americans in the labor force rose to 62.9 percent from 62.7 percent. However, that share is eventually expected to resume a longer-term decline as baby boomers continue to retire in large numbers. That will keep pushing down the jobless rate, said Ian Shepherdson of Pantheon Macroeconomics. He expects unemployment to reach 3.5 percent by the end of the year.