Economy Watch: Economy Creates 220K Jobs in June

Economy Watch: Economy Creates 220K Jobs in June

Economy Watch: Economy Creates 220K Jobs in June

USA employers added a robust 222,000 jobs in June, the most in four months, a reassuring sign that businesses may be confident enough to keep hiring despite a slow-growing economy.

Economists say June's booming job growth likely reaffirms the Federal Reserve's plans for the rest of the year, including an interest-rate hike, even as lagging wages continue to cast a cloud on economic growth.

That was far better than the 175,000 jobs expected by Wall Street economists.

Job gains have averaged 162,000 through the first five months of this year, according to the Labor Department, a solid total that has pulled the unemployment rate down from 4.7 percent in December to 4.3 percent in May, the lowest in 16 years.

The current labour force participation rate in the U.S. is 62.8 per cent, well down on its pre-2008 level, when it was as high as 66 per cent.

In early Friday trades, the Dow Jones Industrial Average DJIA, +0.34% rose. The U.S. added 207,000 jobs in April, an upward revision of 33,000. It was last at 113.88, up 0.6 percent.The euro, on the other hand, rose to around $1.1430, from $1.1411 ahead of the jobs report, and was last at $1.1395, down 0.2 percent.

While job growth picked up, economists see more room for improvement in wages and participation in the workforce, which have been slow to keep pace.

The June jobs report is out and it's a beat. "It creates a bit of a goldilocks backdrop for stocks". Economists had expected the unemployment rate to hold steady.

A broader measure of unemployment, including discouraged workers and those who are working part time but prefer full-time work, inched up from 8.4 percent in May to 8.6 percent in June.

Although more Americans joined the labor force and found jobs in the month of June, the number of unemployed also increased. "It's nice to see the number jump back up...but wage growth is not going higher". Employers in many industries remain reluctant to raise pay. The U.S.is forecast to grow twice as fast in the second quarter as it did in the first three months of the year.

"It's a good report for the economy", he said. "There was nothing in this report that was strong enough to convince the Fed to change its course".

Analysts said the job gains bolster the case for the Federal Reserve to continue to raise interest rates, even though inflation remains lower than policymakers at the United States central bank would like.

Mark Zandi, chief economist at Moody's Analytics, said that many workers are too cautious to push for raises, partly because of the lingering impact of the Great Recession, when almost 9 million people lost jobs. The dollar initially weakened to 113.54 yen following the jobs report from 113.74 yen minutes before the data's release, as investors focused mostly on the inflation implications of the average earnings growth.

For now, an unchanged path at the Fed is viewed by investors as a positive for stocks.

Pappalardo expects little change in the market's recent momentum, considering how the June report offered a consistent picture of the USA economy.

- Over the next decade, labor force growth will be constrained by slow population growth and by the aging and retirement of the baby-boom generation.

The Dow Jones gained 0.4%, hitting 21,395.32, and the S&P 500 also climbed 0.4% to 2,418.27.

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