Mostly Upbeat Jobs Report, But Wage Growth Disappoints
Report numbers do not change the overall picture for Federal Reserve
U.S. employers accelerated their pace of hiring in June, a sign of labor market growth eight years into the economic expansion, but wage growth numbers disappointed.
Nonfarm payrolls rose by a seasonally adjusted 222,000 from the prior month, the Labor Department said, the largest increase since February and above pre-report expectations of 174,000. The agency singled out health care, social assistance, financial activities, and mining as sectors where jobs were added. The U.S. labor market has added jobs every month since October 2010, absorbing roughly 16 million workers. Link to report.
Meanwhile, revisions showed job growth was better in April and May than previously thought. The economy has created an average of 194,000 jobs over the past three months. That compares favorably to a monthly average of 166,000 during the first quarter, and pace of 187,000 for all last year.
The unemployment rate ticked up to 4.4% from 4.3% as more people joined the workforce, but not all of them found jobs. Federal Reserve officials project the jobless rate will average 4.5% to 4.8% over the long run.
The labor force participation rate, which tracks how many people who could be working or want to be working are working, was 62.8% in June, essentially flat. In May, it was at 62.7%. In June 2016, it was 62.7%. The participation rate "has shown no clear trend over the past year," the Labor Department said.
Wage growth showed average hourly earnings for private-sector workers rose 2.5% in June from the year-earlier period, little changed from prior months, the Labor Department said. "In June, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.25. Over the year, average hourly earnings have risen by 63 cents, or 2.5 percent," the Labor Department noted. The average workweek rose by 0.1 hour to 34.5 hours. Wages were below forecasts, even with the jobless rate close to the lowest since 2001. Wages showed declines in nondurable-goods manufacturing, professional and business services; small gains in retail, transportation and warehousing.
Market reaction: The yield on 10-year U.S. Treasury notes rose 1 basis point on Friday to 2.378%, around its highest in eight weeks. U.S. stock futures jumped after the report showed a better-than-expected headline number for jobs created in June. Consensus: the report numbers do not change the overall picture for the Federal Reserve.
