Employers added 288,000 jobs in June, significantly more than the 215,000 economists were anticipating. The unemployment rate, which is drawn from a different survey of households, dropped from 6.3% to 6.1% the lowest rate since September 2008.
Immediately following the news the S&P 500, The Dow Jones
Industrial Average and Nasdaq Composite were in the green, continuing
positive trends seen leading up to the pre-bell release. The Dow crossed
17,000 for the first time ever seconds after the opening bell before
settling around 17,050.The May payroll number was revised up from plus 217,000 jobs to plus 224,000. April’s employment number was also revised from 282,000 jobs added to 304,000. Total employment gains those months were therefore 29,000 higher than BLS — a division of the Department of Labor — previously reported. Job growth averaged 272,000 for the last three months.
“This was a strong report any way you slice it,” wrote RBS U.S. Economist Omair Sharif, noting that the unemployment rate is “where the Fed thought we would be at year-end, and it’s only June.”
In a call following the results Mike Schenk, vice president of economics and statistics at the Credit Union National Association, said the strong headline numbers show a “bounce back effect.” Adding, “The first quarter numbers were not all that encouraging especially in terms of the economic growth numbers. People seemed to be sitting on the sideline in terms of purchasing behavior. Clearly the consumer is back in the market place.”
Schenk also noted that CUNA’s monthly survey of credit unions showed the organizations loan portfolios increasing by 1.2% last month, the strongest growth since August 2005. “Consumers are engaged. They are not only buying more, but buying big ticket items so a lot of that pent up demand is being expressed.”
The labor force participation rate, however, was stagnant at 62.8% for the third month in a row. At 59% the employment-population ratio was little changed from the prior month. “Perhaps the only disappointment might be that average hourly earnings growth remains subdued,” wrote RBS’ Sharif. Hourly earnings gained just 0.2% in June, bringing the year-over-year rate to 2.0%. The workweek was steady at 34.5 hours.
Amidst a data set where most points are positive — and notably moving in the same direction — Tara Sinclair, economics professor at George Washington University and economist at job search site Indeed.com, said she sees the stagnate wage growth and participation rate as closely related. “If employers see there is still this shadow labor force out there, there is no pressure to raise wages.”
The sector with the most new jobs was business services with 67,000 jobs added, 14,000 more jobs than the industry’s 12 month average. Retail trade, food services and drinking places and healthcare added 40,000 jobs, 33,00 jobs and 21,000 jobs respectively. Employment was also up in the transportation, financial, manufacturing and wholesale trade industries. Employment was little changed in mining, construction, information and government.
Sinclair noted that the diversity is a sign of a more robust recovery than has been seen in recent months and years. The diversity of jobs added coincided with the wide range of job postings Indeed found across the web in May. Similar patterns in June posting may pay off in July as well.
Joseph Lake, U.S. analyst for The Economist Intelligence Unit, pointed out that before this year many economy watchers were calling this a “jobless recovery.” Year-to-date, however, Lake wrote, “the riddle has been reversed; companies are creating jobs at a rapid rate, while the economy is tanking.” Last week the Bureau of Economic Analysis released its third estimate of real gross domestic product for the first quarter 2014. The release showed output in the U.S. declining at an annual rate of 2.9%.
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