U.S. hiring accelerates while wage growth stays flat
(Bloomberg) — U.S. hiring picked up in June while wage gains disappointed yet again, a mix that may continue to be a puzzle for the economy and policy makers, Labor Department figures showed Friday.
|Highlights of employment (June) |
Payrolls rose 222k (est. 178k); April-May revisions added 47k jobs
Unemployment rate, derived from a separate survey of households, rose to 4.4% (est. 4.3%) from 16-year low of 4.3%
Average hourly earnings rose by 0.2% m/m (est. 0.3% rise); up 2.5% y/y (est. 2.6%)
While payroll gains were broad-based and boosted by the biggest jump in government jobs in almost a year, wages were below forecasts, even with the jobless rate close to the lowest since 2001.
Sustained hiring in June is evidence of the kind of labor-market resiliency that could eventually lead to a stronger acceleration in wages. At the same time, the month’s data could also reflect a new graduating class and the summer’s seasonal workers joining the labor force -- some likely welcomed by employers who are struggling to find workers.
The data suggest the job market is attracting people off the sidelines, as the size of the labor force and number of unemployed people increased, indicating more people are actively looking for work. The number of people who went from out of the labor force to employed rose to 4.7 million, the highest in data going back to 1990.
While wage growth is running below the peak of previous expansions, the figures may be depressed by weak productivity and the retirement of high-earning Baby Boomers, according to economist Stephen Stanley of Amherst Pierpont Securities LLC.
Nevertheless, the report marks a relatively strong finish for the labor market in the second quarter that should support continued gains in consumer spending in the coming months. Federal Reserve policy makers raised interest rates last month and reiterated plans to start reducing their balance sheet and increase borrowing costs once more this year.
“We’re seeing pretty steady, solid hiring,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “We’re just not seeing much acceleration in wages. The unemployment rate picked up for the right reasons. The participation rate ticked up as job seekers came back into the market. It could reflect increased confidence in the labor market.”
“This doesn’t change the big picture materially for the Fed,” Feroli said. “It’s mixed -- We had a little higher unemployment, little softer wages but then very strong payrolls.”
- Participation rate, or share of working-age people in the labor force, increased to 62.8 percent from 62.7 percent, still near the lowest level in more than three decades
- The U-6 or underemployment rate rose to 8.6 percent from 8.4 percent, the first increase since January; figure includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking
- The measure known as people working part-time for economic reasons rose by 107,000 to 5.33 million
- Private employment gained by 187,000 (median estimate was 170,000) after a 159,000 increase; government payrolls rose by 35,000, the most in almost a year, driven by localities
- Factory payrolls rose by 1,000; retail hiring increased by 8,100; and leisure and hospitality employment was up 11,000
- Average work week for all workers rose to 34.5 hours from 34.4 hours (median estimate was 34.4 hours)
- Wages showed declines in nondurable-goods manufacturing, professional and business services; small gains in retail, transportation and warehousing; overall wages rising at 2 percent three-month annualized pace