- Nonfarm payrolls rose 372,000 in June
- Private sector employment is back above pre-pandemic levels
- Unemployment rate held steady at 3.6%
- Average hourly earnings rose 0.3%; up 5.1% year-on-year
WASHINGTON, July 8 (Reuters) – U.S. employers hired far more workers than expected in June and continued to boost wages with steady growth, signs of continued strength in the labor market that give the Federal Reserve ammunition to secure another 75 percent interest rate basis point hike this month.
The closely watched Labor Department employment report on Friday also showed no indication that companies are cutting back hours for workers. The number of people working part-time for economic reasons fell to its lowest level in nearly 21 years.
Strong job growth allayed fears of an impending recession and offered hope that any downturn would be mild.
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“If you’re looking at this report for signs that we’re already in a recession, you’re probably going to come up empty,” said Nick Bunker, an economist at Indeed in Washington. “For now, employers continue to hire significant numbers of workers at higher wages. This is a cause for celebration.”
The survey of businesses showed that nonfarm payrolls increased by 372,000 jobs last month. It was the fourth straight month of job gains of more than 350,000 and leaving jobs 524,000 below the pre-pandemic level. The private sector has recovered all the jobs lost during the COVID-19 pandemic, and employment is 140,000 higher than in February 2020. Government employment remains in the hole by 664,000.
Economists polled by Reuters had forecast 268,000 jobs added, with estimates ranging from 90,000 to 400,000. June’s broad increase was led by the professional and business services sector, which added 74,000 jobs. Leisure and hospitality payrolls increased by 67,000 jobs. But manufacturing employment remains down 1.3 million since February 2020.
There were also big wage gains in the health care, information, and transportation and warehousing industries. Manufacturing added 29,000 jobs and recovered all jobs lost during the pandemic. The construction payroll increased by 13,000 jobs.
The economy added 2.74 million jobs in the first half of the year. President Joe Biden hailed the strong employment gains.
“No country is in a better position than America to reduce inflation without giving up all the economic gains we’ve made over the past 18 months,” Biden said in a statement.
Wall Street stocks fell. The dollar fell against a basket of currencies. US Treasury yields rose.
A job seeker leaves a job fair for airport-related jobs at Logan International Airport in Boston, Massachusetts, U.S., December 7, 2021. REUTERS/Brian Snyder
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A DIFFERENT RECESSION The labor market is strong despite a contraction in gross domestic product in the January-March quarter. A series of tepid reports ranging from consumer spending in May to housing and manufacturing led most economists to expect GDP to contract again in the second quarter.
With a tight labor market, however, a second consecutive quarterly contraction in GDP would not mean a recession.
“But if the U.S. economy is in or about to enter a recession, it will be a recession of a significantly different nature than other historical downturns,” said Noah Williams, an assistant fellow at the Manhattan Institute.
“Recessions are largely characterized by declines in employment, usually beginning with a slowdown in business hiring. Such a slowdown has yet to occur on a large scale.”
The Fed wants to cool the demand for labor to help reduce inflation to the 2% target. The US central bank in June raised its benchmark overnight interest rate by three-quarters of a percentage point, its biggest increase since 1994. Markets overwhelmingly expect the Federal Reserve, which has raised interest rates 150 basis points since March, to unveil another 75-basis-point increase at a meeting later this month.
Next Wednesday’s June inflation data, which is expected to show an acceleration in consumer prices, is also seen as giving policymakers more cover to raise borrowing costs further.
Average hourly earnings rose 0.3% in June after rising 0.4% in May. That reduced the year-on-year increase to 5.1% from 5.3% in May. Despite the slowdown, wage pressures remain strong, with average hourly earnings for manufacturing workers increasing a solid 0.5%. They increased by 6.4% on an annual basis.
With 11.3 million job openings at the end of May and nearly two jobs for every unemployed person, wages will continue to rise. Read more
The average working week is holding steady at 34.5 hours. Details of the household survey from which unemployment is derived were mixed. The unemployment rate remained unchanged at 3.6% for the fourth straight month as 353,000 people left the labor force, almost half of them women. As a result, the labor force participation rate, or the share of working-age Americans who have or are looking for a job, fell to 62.2 percent from 62.3 percent in May.
Household employment fell by 315,000 jobs. But the number of people working part-time for economic reasons fell by 707,000 to 3.6 million, the lowest level since August 2001.
A broader measure of unemployment, which includes people who want to work but have given up looking and those working part-time because they can’t find full-time work, fell to 6.7% . That’s the lowest level since the government began tracking the series in 1994, and down from 7.1 percent in May.
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Reporting by Lucia Muticani Editing by Chizu Nomiyama
Our standards: The Thomson Reuters Trust Principles.
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