The U.S. economy added a higher-than-expected number of jobs in June, with 213,000 positions created versus analysts’ expectations for 195,000.
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The unemployment rate moved higher, off an 18-year low, to 4% from May’s 3.8%. Economists say the slight move higher is a positive as it reflects more workers entering the workforce after sitting on the sidelines, drawn by the plethora of jobs. In June, 601,000 Americans entered the labor force, and not all found jobs.
This trend comes as companies are bemoaning the lack of available labor.
Economists polled by Thomson Reuters anticipated that the unemployment rate would hold steady at May’s 3.8%, which was the lowest since April 2000.
June's labor force participation rate came in at 62.9%.
“These numbers provide further evidence of a very healthy economy,” according to James McCann, senior global economist at Aberdeen Standard Investments. “Wage growth is a bit softer than seen over recent months and higher participation has pushed the unemployment rate up. This raises the question of how much slack is still left in the labor market.”
May and June jobs additions were upwardly revised by a net 37,000. Through the first half of the year employers added an average of 215,000 workers to payrolls each month. Last year, the average monthly jobs growth was 182,000.
Mark Fleming, chief economist at First American told FOX Business that he focuses less on the month-over-month reading and more on the longer term.
Fleming has a contrarian view on the tight labor market, noting that factors such as the prime age participation rate, which is still holding at prerecession levels, and stagnant wage growth do not point toward a tight labor supply. Economists use "prime age" to describe people between the ages of 25 and 54.