June surge sees US adding 222,000 jobs

A New York City store looking to hire staff. Labour market strength means the US Federal Reserve may go for a third interest rate increase this year.
A New York City store looking to hire staff. Labour market strength means the US Federal Reserve may go for a third interest rate increase this year.PHOTO: AGENCE FRANCE-PRESSE

Jobless rate rises to 4.4%, but wage growth below forecast amid weak inflation

WASHINGTON • United States job growth surged more than expected last month and employers increased hours for workers, signs of labour market strength that could keep the US Federal Reserve on course for a third interest rate increase this year despite benign inflation.

Non-farm payrolls jumped by 222,000 jobs last month, the US Labour Department said yesterday, beating economists'expectations for a 179,000 gain. Data for April and May was revised to show 47,000 more jobs created than previously reported.

The jobless rate rose a tenth of a point to 4.4 per cent, according to the US Labour Department, while wages were below forecast.

US stocks gained on the news, with the S&P 500 futures up 0.25 per cent after being flat just before the numbers were released.

"Once again, the buzz kill on the jobs report is the lack of more substantial wage growth. Average hourly earnings are up 2.5 per cent over the past year. This suggests that we've not yet checked off the 'full employment' box," said Mr Mark Hamrick, senior economic analyst at Bankrate.com. "More than five million Americans still work part-time who'd like to have full-time work."

Average hourly earnings rose four cents for the month to US$26.25 (S$36.28), up 0.2 per cent over May and 2.5 per cent higher than June of last year.

"Inflation has been very, very low and, usually, businesses raise their workers' pay by at least the rate of inflation," said Mr Ryan Sweet, an economist at Moody's Analytics. Stronger wage growth should come later this year or at the start of next year, as businesses "continue to struggle to find qualified workers, and one solution to that is to raise starting salaries or workers' pay."

The labour force participation rate rose a tenth of a point to 62.8 per cent, at a time when many US students and new college graduates began hunting for summer work. As more people look for jobs, the unemployment rate may rise.

Job gains were seen in healthcare, which added 37,000 new positions, financial services, which gained 17,000, and the mining sector, which gained 8,000 jobs amid a modest recovery in the oil and gas sector since last summer.

While the pace of job gains remains relatively strong, it was significantly slower than what would be required to meet US President Donald Trump's promise of creating 25 million jobs in the next decade.

AGENCE FRANCE-PRESSE, REUTERS

A version of this article appeared in the print edition of The Straits Times on July 08, 2017, with the headline 'June surge sees US adding 222,000 jobs'. Print Edition | Subscribe