US job growth strong... but unemployment rate rises
WASHINGTON DC: US job growth increased more than expected in June as manufacturers stepped up hiring, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases.
Nonfarm payrolls rose by 213,000 jobs last month, the Labor Department said on Friday. Data for April and May was revised to show 37,000 more jobs created than previously reported. The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.
The unemployment rate rose to 4.0 per cent from an 18-year low of 3.8 per cent in June as more people entered the labor force in a sign of confidence in the jobs market. That was the first increase in the jobless rate in 10 months.
The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, rose to 62.9 per cent last month from 62.7 per cent in May. It had declined for three straight months.
Average hourly earnings gained five cents, or 0.2 per cent in June after increasing 0.3 percent in May. That kept the annual increase in average hourly earnings at 2.7 per cent.
The moderate wage growth should allay fears of a strong build-up in inflation pressures. The Fed's preferred inflation measure hit the central bank's 2 per cent target in May for the first time in six years. It is expected to hover around its target for a while, in part because of labor market tightness.
Minutes of the Fed's June 12-13 policy meeting published on Thursday offered an upbeat assessment of the labor market. The US central bank increased interest rates last month for the second time this year and has projected two more rate hikes by year end.
The dollar extended losses against the euro and the yen after the employment report. Prices for US Treasuries rose. US stock index futures were little changed.
With a record 6.7 million unfilled jobs in April, economists are optimistic that wage growth will accelerate later this year.
Economists polled by Reuters had forecast nonfarm payrolls increasing by 195,000 jobs last month and the unemployment rate steady at
3.8 per cent.