Jobs Growth in U.S. Accelerates During June
Job growth in the United States surged more than had been expected during June while employers increased the number of hours for their workers, signs of strengthening in the labor market that might keep the U.S. Federal Reserve on line for its third hike in the interest rate this year despite wage gains being sluggish.
Payrolls for non-farm jobs increased 222,000 during June, boosted by strong gains in government, healthcare, restaurants as well as business and professional services, said the Labor Department in its monthly report on Friday.
That was the second largest increase in jobs for 2017 and beat expectations of 179,000 by analysts. The economy created an additional 47,000 new jobs for April and May than were reported previously.
While unemployment bumped up to 4.4% from 4.3% from May that was due to more people looking to work which is a sign of labor market confidence.
The continued strength in the labor market across the U.S. means that the Federal Reserve will be on track to start shrinking its balance sheet starting in September and increase rates once again in December, said an analyst on Wall Street late Friday.
The unemployment rate has dropped in 2017 by four tenths of one percent and is near the median forecast set by the Fed for 2017.
Though the workweek’s average length increased by nearly one hour during May, wage growth remained tepid, which put a wrinkle into the upbeat report on employment for the U.S. on Friday.
The average earnings per hour were higher by four pennies or 0.2% during June after increase 0.1% during May. That helped to lift the wage increase year on year from 2.4% to 2.5% during May, suggesting there is slack still remaining in the market.
Financial markets in the U.S. shrugged off the wage growth as investors focused more on the payrolls jump, which reinforced many views that the U.S. economy had regained speed during the second quarter following a lackluster beginning to 2017.
Optimism remains that the tightening labor market is set to spur on faster growth in wages amidst growing evidence that companies are struggling to find enough qualified workers.
Economists, including those in the Fed, believe weak productivity has constrained wages. Others have argued that soft growth in the economy during 2016 hurt wages.
However, with inflation retreating further below the 2% target of the Fed during May, economists are expecting another hike of interest rates by the U.S. central bank in December.