WASHINGTON – U.S. employers picked up their pace of hiring in June, evidence of sustained economic momentum heading into the second half of the year.
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June nonfarm payrolls rose by a seasonally adjusted 222,000 from the prior month, the Labor Department said Friday. The unemployment rate ticked up to 4.4% from 4.3% the prior month as more people joined the workforce and started looking for a job.
Economists surveyed by The Wall Street Journal had expected 174,000 new jobs and a 4.3% unemployment rate in June. April's payrolls were raised to 207,000 and May's tally to 152,000, a net increase of 47,000.
"Today marks the economy's eight-year anniversary since the end of the Great Recession, with this morning's jobs report revealing a booming labor market this summer," said Andrew Chamberlain, chief economist at job search site Glassdoor.
The U.S. labor market has been a bright spot in a long recovery marked by slow overall growth. But even with 81 consecutive months of job creation, a historically large share of Americans have opted out of the workforce and wage gains have remained below prerecession levels.
Average hourly earnings for private-sector workers rose 2.5% in June compared with a year earlier, a level little changed since March. In the months before the recession, wage gains topped 3%.
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"Although we continue to add more than 200,000 jobs this late in the cycle, it is not translating into higher wages," said Bodhi Ganguli, lead economist at Dun & Bradstreet. "That points to the underlying weakness in productivity, a structural problem that won't be fixed overnight."
In one positive sign, the average workweek rose by 0.1 hour to 34.5 hours.
In response to broad improvements across the labor market, the Federal Reserve raised short-term interest rates last month for the third time since December. Officials penciled in one more increase for this year, and appeared to reach consensus on how to gradually reduce the Fed's $4.5 trillion asset portfolio, moves that could lead long-term rates to rise.
"Today's report will keep the Federal Reserve on the path of gradually raising interest rates," said Gus Faucher, chief economist at PNC Financial Services.
The labor-force participation rate inched up to 62.8% in June from 62.7% the prior month. The rate, hovering near a four-decade low, has been little changed over the past year. Low participation is partly because the population is aging and more workers are retiring, though economic factors also are at play.
Among prime-age workers, ages 25-54, the participation rate ticked up to 81.6%. It had bottomed out at 80.6% in September 2015. While there has been progress, the rate remains below its nearly 83% average in the two years before the recession.
An alternative measure of unemployment and underemployment, which includes those who have stopped looking and those in part-time jobs who want full-time positions, was 8.6% in June, up from 8.4% from the prior month. The rate averaged 8.3% in the two years before the recession.
The U.S. labor market has added jobs every month since October 2010, a long stretch that has absorbed roughly 16 million workers and slowly repaired much of the damage from the Great Recession.
Donald Trump as the Republican candidate for president promised faster economic growth and 25 million new jobs through a tax overhaul, trade reform and regulatory relief. The economy has continued a steady advance since he took office, though more rapid job creation could become increasingly difficult during a period of full employment -- the point at which there is a rough match between available jobs and people who want to work.
Now, companies often complain they can't find qualified employees, a possible byproduct of a limited pool of workers, employers demanding skills workers don't have, geographical mismatches or wages that aren't yet high enough to draw people off the sidelines.
"What's happening with [food-service] operators? They can't get labor. Wages are escalating," James Snee, chief executive at Hormel Foods Corp., told investors in June.
In June, job gains were strongest for health care, social assistance, financial services, mining, professional and business services, food services,; and government.
Monthly job gains have averaged 194,000 over the past three months, comparing favorably to 166,000 in the first quarter of the year and 187,000 for all of 2016.
Write to Jeffrey Sparshott at firstname.lastname@example.org
(END) Dow Jones Newswires
July 07, 2017 10:42 ET (14:42 GMT)