US hiring topped forecasts in June while unemployment rose from an 18-year low and wage gains unexpectedly slowed, indicating the labor market has room to keep expanding. Most economists say they still think the low unemployment rate will eventually force more employers to offer higher pay in order to fill jobs. The labor force participation has increased, which brought the unemployment rate up slightly from 3.8 percent to 4 percent.
Remaining slack in the job market could be keeping a lid on wage growth, said Cathy Barerra, chief economist at ZipRecruiter.
Overall, unemployment inched up to 4 percent last month, largely due to the expanding pool of people actively seeking jobs.
"The solid 213,000 gain in non-farm payrolls in June, which followed an even stronger 244,000 rise in May, illustrates that labor market conditions remain unusually strong", said Andrew Hunter, U.S. economist at Capital Economics. Before joining The Washington Post, she was a senior economics reporter at CNN and a columnist and deputy editor at the Patriot-News in Harrisburg, Pa.
Although the report for June was far from uniformly strong, it will reinforce the perception that the USA will continue to outpace other countries and should be able to navigate trade policy uncertainties as long as they don't lead to a full-blown global trade war. The factory jobs were concentrated in the automobile sector, which had seen a decline in employment in May after a fire at a parts supplier disrupted production. But in Friday's revised figures, BLS reports that the legal services industry actually gained 300 jobs in May, compared with April.
Altogether, 285,000 new jobs have been added in the manufacturing sector in the past year.
Among industrial sub-sectors, the three standouts for jobs improvement in June were: "education and health services", +54,000; "professional and business services", +50,000; and in a long-time-coming and pleasantly-welcome development, "manufacturing", +36,000. As executives say they can not find enough qualified workers, some are turning to hiring people who are incarcerated or people with disabilities.
Policymakers at the Federal Reserve, the United States central bank, monitor the report because they can raise interest rates when employment is close to full, wages are rising healthily and unemployment is low.
Still, average hourly pay rose just 2.7 per cent in June from 12 months earlier, meaning that after adjusting for inflation, wages remain almost flat.
"He pointed to minutes from the June Federal Open Market Committee, which indicate that some business leaders' "'plans for capital spending had been scaled back or postponed, '" which will likely also affect hiring.
Large companies are also starting to feel the effects of steel and aluminum tariffs.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in June.