USA hiring topped forecasts in June while unemployment rose from an 18-year low and wage gains unexpectedly slowed, indicating the labor market has room to keep expanding.
The U.S. economy added 213,000 jobs in June, the Labor Department reported Friday, as the unemployment rate rose to 4 percent. Further gains are expected in government employment after payrolls rose by 5,000 jobs in May.
Michael Gapen, chief U.S. economist at Barclays Plc in NY and a former Fed official, said that the boost in workers coming into the labour market bodes well for pushing down the unemployment rate again.
Just the same, in five of the six months prior to June, construction workers (not including bosses) saw weekly earnings hikes of more than +4.3% year over year. These individuals accounted for 23 percent of the unemployed, says the Labor Department.
Although average hourly wages grew 2.7% in June from a year ago, they didn't change much from May and came in below economists' expectations. At more than 1.141 million people employed in the industry in June, the legal jobs figures edged outside of a range that has prevailed since December 2016.
Major U.S. stock indexes were mostly higher July 6 after the jobs report was issued, keeping the market on track for a weekly gain after two weeks of losses.
Service providers boosted payrolls by 149,000, led by a 54,000 gain in education and health services, and 50,000 in professional and business services. That trend is likely to continue through 2018, with some economists predicting the jobless rate will keep falling to 3.5 percent by year end. Retailers, however, cut 22,000 jobs as the sector continues to grapple with a shift from physical stores to online shopping.
Workers who haven't gone to college accounted for all of this month's net increase in the labor force and employment.
The labor force participation rate also went up by 0.2 percent to the current 62.9 percent after 601,000 joined the civilian labor force. But even that reflected a healthy economy: It rose because more than 600,000 Americans joined the work force.
According to Gallup, some 65 percent of Americans believe now is a good time to find a "quality job".
Despite the small bump in unemployment, a decade of steady job growth following the Great Recession has pushed unemployment to the lowest level in decades.
The report provided positives all around.
A long run of impressive monthly job creation is among the main reasons why the projections of economists, in both the private and public sectors, have continued to be bullish for US growth, despite growing uncertainty about the rest of the global economy and the threat of a trade war. What's more, gains for April and May were revised up by 37,000.
Unemployment ticked up slightly to 4 percent as more people looked for work.
For the Fed, the report presents a bit of a dilemma.