More jobs but issues remain in US economy

Job seekers at a job fair in Los Angeles.
Job seekers at a job fair in Los Angeles.PHOTO: REUTERS

WASHINGTON • The economy of the United States churned out a solid 223,000 net new jobs last month, the Labour Department said, but wages remained flat, underscoring continued weaknesses in the economy.

In a decidedly mixed report on the jobs market, the department said the unemployment rate fell to 5.3 per cent, the lowest level since April 2008.

Yet, that gain came more from people dropping out of the jobs market than from new hiring by companies and governments.

Data from the volatile household survey showed the labour force shrank by 432,000 people in the month, largely explaining the 0.2 percentage point fall in the jobless rate.

At the same time, job creation numbers for April and May from the more consistent establishment survey were reduced by a total of 60,000 positions.

FED ON COURSE FOR TIGHTENING

"We believe this report keeps the Fed on track for tightening at the September meeting, but there will be two more employment reports between now and then.''

MR JIM O'SULLIVAN, of High Frequency economics.

And average hourly earnings were flat from May at US$24.95 (S$33.64), and up a modest 2 per cent year-on-year, lower than what most analysts had been expecting after the steady hiring gains of the past year.

While the numbers did not undermine the general picture of steady, moderate growth in the economy, analysts said they were not strong enough to confirm that the US Federal Reserve, as has been expected, will begin raising zero-level interest rates in the coming months.

"We believe this report keeps the Fed on track for tightening at the September meeting, but there will be two more employment reports between now and then," said Mr Jim O'Sullivan of High Frequency economics.

Market response to Thursday's report was mixed.

The greenback was under pressure yesterday, while the euro was little changed, ahead of this weekend's Greek bailout referendum.

The dollar was mostly weaker against other Asia-Pacific currencies. It eased to 13,306 rupiah from 13,352 rupiah on Thursday, to S$1.3499 from S$1.3516, to 45.11 Philippine pesos from 45.19 pesos, and to 1,120.83 won from 1,123.18 won.

The greenback also fell to 63.37 rupees from 63.60 rupees, while it was unchanged at 33.78 baht.

The Australian dollar weakened to 75.84 US cents from 76.47 US cents after the country reported weaker-than-expected retail sales data. AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on July 04, 2015, with the headline 'More jobs but issues remain in US economy'. Print Edition | Subscribe