U.S. Hiring Strong in June; Unemployment Rate Rises as More Enter Labor Force
Date : 07/06/2018 @ 9:00AM Source : Dow Jones News
NOTE: Add in a couple million recent graduates that are now looking for a job!
WASHINGTON--The unemployment rate ticked up in June from an 18-year low, but steady hiring and an increased number of job seekers suggest a strong labor market drew in Americans from the sidelines.
U.S. nonfarm payrolls rose a seasonally adjusted 213,000 in June, the Labor Department said Friday. The unemployment rate rose to 4.0% rose from 3.8% in May. Wages increased modestly last month.
Economists surveyed by the Wall Street Journal had expected 195,000 new jobs and a 3.8% unemployment rate. Revised figures show employers added 244,000 jobs in May and 175,000 in April, a net upward revision of 37,000. Through the first half of the year, employers added an average of 215,000 workers to payrolls each month, well outpacing 2017's average monthly growth of 182,000.
That runs counter to economists' expectation for hiring to broadly ease as the labor market tightens. U.S. employers have added to payrolls for 93 straight months, extending the longest continuous jobs expansion on record.
The unemployment rate rose in June from the lowest mark since April 2000 because 601,000 Americans entered the labor force, and not all found jobs. It's a sign that historically low unemployment may have prompted some of those on the sidelines to start job searches.
In June, the share of American adults working or looking for a job rose by 0.2 percentage point to 62.9%. The rate is up slightly from a recent low of 62.3% in 2015, but still near the smallest share of adults participating since the late 1970s, a time when women were still entering the workforce in greater numbers.
Steady hiring and low unemployment shows the labor market continues to be an area of strength for the economy since the recession ended nine years ago.
What might be different now is the other aspects appear to be picking up steam. Some economists project economic output rose at better than 4% annual pace in the second quarter for the first time since 2014. Rising consumer spending, manufacturing output and exports are expected to have contributed to the gain, set to be officially reported later this month.
If sustained, that would be a turn from much of the expansion in which hiring has been consistent, but growth has been sluggish, holding near a 2% annual rate. One explanation is wages. Even thought Americans were finding jobs, scant raises left them with little room in their budgets to step up spending.
That could be changing, albeit very slowly. Average hourly earnings for all private-sector workers increased 5 cents last month to $26.98. Wages rose 2.7% from a year earlier in June. Wages haven't increased at better than a 3% rate from a year earlier since the recession ended in 2009--but wages have risen at least 2.5% from a year earlier in 16 of the past 17 months. That's a faster pace than recorded earlier in the expansion.
Consistent raises and lower taxes could be translating into stronger consumer spending. But consumer prices are also rising at a faster rate, threatening to effectively eat into the buying power of those wage gains.
Stronger inflation and low unemployment likely would keep Federal Reserve policymakers on course to gradually raise their benchmark interest rate over the next year to a level that no longer seeks to stimulate growth.
"Most Americans who want jobs can find them," Fed Chairman Jerome Powell said in a speech last month. "High demand for workers should support wage growth."
The report showed professional and business services adding 50,000 jobs in June. Employment also grew in manufacturing, health care and construction. Employment fell at retailers. All levels of government added 11,000 jobs last month.
The broadest measure of unemployment, including those too discouraged to look for work, plus Americans stuck in part-time jobs but who want to work full-time, rose to 7.8% from 7.6% the prior month. That rate, known as the U-6, remains somewhat elevated compared to the last time unemployment was similarly low.
The average workweek was unchanged at 34.5 hours in June.
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