US job market bounces back after 2-month lull

Job seekers at a career fair in Houston, Texas, on Thursday. The US leisure and hospitality sector added 59,000 jobs, registering the biggest gain since February last year. But, overall, wages advanced less than projected.
Job seekers at a career fair in Houston, Texas, on Thursday. The US leisure and hospitality sector added 59,000 jobs, registering the biggest gain since February last year. But, overall, wages advanced less than projected.PHOTO: BLOOMBERG

WASHINGTON • America's job market stirred to life in June as payroll growth accelerated by the most since last October after a two-month lull, assuaging fears of broader cutbacks by companies.

Payrolls climbed by 287,000 last month, exceeding the highest estimate in a Bloomberg survey, after a revised 11,000 gain in May, a Labour Department report showed yesterday. The median forecast in a Bloomberg survey called for a 180,000 increase.

The unemployment rate stood at 4.9 per cent as more people entered the workforce but wages advanced less than projected.

The figures will help reassure workers and Federal Reserve policymakers alike that companies are staying the course on hiring in the face of weaker profits and overseas developments such as Brexit.

While job growth may be moderating as the economy approaches full employment, wages are slowly picking up and will underpin consumer spending.

While job growth may be moderating as the economy approaches full employment, wages are slowly picking up and will underpin consumer spending.

The weight of evidence suggests "that the May job report exaggerated the degree of slowing in the labour market", JPMorgan Securities chief US economist Michael Feroli said. Job growth is "obviously not as booming as we were seeing over much of the last few years, which was probably unsustainable".

Payrolls in leisure and hospitality registered the biggest gain since February last year, healthcare providers took on the most workers since last October, and factories added the most jobs in five months.

The return of 35,100 Verizon workers, who were excluded from May's payroll count while on a month-long strike, also boosted job growth last month.

Average hourly earnings increased only 0.1 per cent last month. The year-on-year gain in earnings rose to 2.6 per cent after advancing 2.5 per cent in May.

The Brexit referendum on June 23 roiled financial markets, raising fears that sustained volatility might negatively impact firms' hiring and investment decisions. Economists have also warned that slower growth in Europe and a stronger dollar could weigh on the US economy.

Minutes of the Fed's June 14 to 15 meeting published on Wednesday showed that officials had agreed that "it was prudent to wait for additional data on the consequences of the UK vote".

The Fed raised rates last December for the first time in nearly a decade, but markets now expect no further increase this year.

Manufacturing gained 14,000 jobs last month after shedding 16,000 jobs in May. Retail added 29,900 jobs, and the leisure and hospitality sector gained 59,000 jobs.

Construction payrolls were unchanged after two months of declines. Even with June's jobs bounceback, forward momentum in the labour market has slowed

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on July 09, 2016, with the headline 'US job market bounces back after 2-month lull'. Print Edition | Subscribe