U.S. job growth rebounded in June, the Bureau of Labor Statistics announced Friday in a jobs report sure to allay economic fears, as the economy created 222,000 new payroll jobs and the unemployment rate ticked up a tenth of a percentage point to 4.4 percent.
The job gains easily beat private-sector economists' expectations of 170,000 new jobs for the month.
Friday's report provides reassurance that job growth remains strong even as unemployment, already at a pre-crisis level, falls to below where Federal Reserve officials think it can sustainably go. The news will likely reaffirm the central bank in its plans to slowly withdraw monetary stimulus, and boost the Trump administration as it pursues tax reform and regulatory relief to accelerate growth.
Only around around 50,000 to 100,000 jobs are needed each month to match population growth and keep unemployment trending down, according to Fed analysis. The U.S. is easily clearing that mark, averaging 194,000 over the past three months, as the job tallies for May and April were both revised up by a combined 47,000.
And it appears that job growth is likely to continue. Layoffs have been increasingly rare, with claims for unemployment benefits running near the lowest levels in decades.
At least in some parts of the country, consequently, joblessness no longer the most pressing problem facing commerce. Instead, a shortage of workers is.
In Colorado, for instance, where unemployment is at a rock-bottom 2.3 percent, construction companies have tried to tempt high schoolers away from college and into the labor pool with higher salaries. In Maine, where the unemployment rate is just 3.2 percent, Gov. Paul LePage released some low-risk prison inmates early in order to help fill summer jobs. "We are looking at every corner of the state to try to put people back to work," he told a local radio station.
Several regional Federal Reserve bank presidents reported at the central bank's mid-June monetary policy meeting that some industries were facing worker shortages and had begun sweetening salary and benefits offers to find or retain employees.
Nevertheless, those anecdotes have yet to translate to clear signs of faster wage growth in the national data. The household survey portion of Friday's report showed hourly wages growing at just a 2.5 percent annual rate, no faster than the trend of recent years.
In continued good news, however, the pressure for companies to find workers appears to be creating more labor supply. The labor force grew by 361,000 in June, bringing up the participation rate to 62.8 percent.
As the unemployment fell to pre-crisis levels over the past few years, labor force participation has held steady. That is a good sign: In light of ongoing downward demographic pressure, workforce participation would be expected to drop if the labor market were not becoming more favorable to workers. It appears that, while Baby Boomers are increasingly opting for retirement, job prospects are good enough to tempt some against early retirement or to draw new people into the job hunt. In fact, a record-high 4.7 million people who had previously been out of the labor force found jobs in June.
The persistent job growth of the late recovery has yielded benefits for some of the groups hit the hardest by the recession. Unemployment among Hispanic Americans plunged to 4.8 percent in June, matching the lowest rate on record. For black Americans, unemployment was just 7.1 percent, the lowest mark on record except the dotcom-bubble month of June 2000.
Altogether, the jobs picture fits the picture that Fed chair Janet Yellen drew in September of last year, when she suggested giving employment "room to run" rather than quickly raising interest rates to slow spending. Job gains continue to mount, without creating the kind of wage pressures that would worry the Fed that inflation is about to rise above its target.
"There's going to be no pressure on inflation from this, certainly, which is one of the things the Fed is hoping for," said Navy Federal Credit Union economist Robert Frick. "It's very possible unemployment can fall further. In fact it almost has to fall further, it looks like at this point, for wage growth to kick in."
June's job creation was broad, with most sectors seeing gains. Even the retail industry, which hemorrhaged jobs in each of the previous months of 2017, added 8,100 jobs in the month.