The June payrolls report released by the U.S. Bureau of Labor Statistics showed a mixed bag. The unemployment rate ticked higher by two percentage points from an 18-year low. Hiring was steady and number of people joining the work force increased.
The non-farm payrolls were seen rising by 213,000 on a seasonally adjusted basis in June while the unemployment rate ticked higher to 4.0% during the month. Wage growth was seen rising at a modest pace, leading to a decline in the U.S. dollar.
Economists surveyed had expected to see 195,000 jobs being added and forecast that the unemployment rate would remain unchanged at 3.8% for the month of June.
Revisions to the previous month’s data showed that employers added 244,000 jobs in May while April’s data was revised to 175,000. This resulted in a net upward revision of 37,000 for the previous two months.
The June’s data showed that the U.S. economy added an average of 215,000 jobs in the first half of the year. This was higher than the previous year’s average of 182,000. The data was contrary to the median forecasts that the U.S. pace of hiring would decrease.
Data showed that the professional and business services added 50,000 jobs during the month. Employment was also seen rising steady in other sectors such as manufacturing, construction and healthcare. The retail sector was the only sector which saw weaker pace of jobs.
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The data for June showed that the economy was seen adding jobs for a consecutive 93 months marking the longest pace of expansion on record so far.
The uptick in the unemployment rate came as over 601k workers entered the labor force. The data underlined the fact that with the unemployment rate at an 18-year low, it encouraged more people to look for jobs.
June’s payrolls data showed that the number of people looking for work increased by 0.2 percentage points with the participation rate rising to 62.9%. Still, compared to three years ago, the participation rate was seen rising by just 0.5 percentage points.
Overall, the data showed that hiring remained steady and that low unemployment continued to be an area of strength in the U.S. labor market. This comes after the U.S. was seen coming out of the recession nearly nine years ago.
The U.S. economy is expected to see the growth expand at a strong pace of 4.0% on an annual basis in the second quarter of the year. This marks the strongest increase in the GDP since 2014. The basis for this comes from the fact that consumer spending and manufacturing output alongside exports were support of the economy.
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Despite the positive data, the wage growth figures for June remained weak. Despite the unemployment hitting decade lows and more people joining the workforce, wage growth has broadly remained sluggish.
Data showed that the average hourly earnings rose 2.7% on an annual basis. This was a clear trend seen with wage growth consistently falling below the 3% mark since the end of the recession. Compared to smaller time periods, wage growth was however seen rising at a faster pace.
Still, the lower taxes were seen to be fuelling the consumer spending. However, consumer prices are also seen rising at a faster pace which could eventually eat into the spending patterns.
The payrolls data comes just a day after the U.S. Federal Reserve released its meeting minutes from June. Data showed that officials were optimistic about the U.S. economy with concerns mostly coming from the uncertainty surrounding the global trade.
In his speech recently, the Fed Chairman, Jerome Powell said that most Americans who wanted to find jobs were finding it and that the high demand for the work force would be supportive of higher wages.