The U.S. economy created 287,000 new jobs in June, and the unemployment rate ticked up to 4.9 percent, the Bureau of Labor Statistics reported Friday.
June’s job gains easily exceeded economists’ expectations for around 180,000 new jobs, and will help allay fears, created by a weak May jobs report, that the economic recovery is losing momentum.
With revisions, May’s job gains were only 11,000. But over the past three months, including an upward revision to April’s numbers, job growth has averaged 147,000 per month, slower than in the past but above the level that economists believe is necessary to keep the unemployment rate trending down.
While the unemployment rate rose two-tenths of a percentage point in June, that increase reflected not job losses but instead more people looking for work: Labor force participation rose by 414,000 during the month, according to the household survey, and the participation rate ticked up from 62.6 percent to 62.7 percent.
The relatively strong June jobs numbers were buoyed in part by the return of 35,000 Verizon workers who were on strike at the time the establishment survey for the May jobs report was conducted.
The underlying details of the report, however, suggested that the gains were not attributable just to returning strikers but to widespread improvement.
Hourly earnings increased by 2.6 annually, another sign that wage growth is accelerating slowly the jobs recovery grinds on.
The number of people forced into part-time work cratered by 587,000, more than reversing a spike in that number in May. A broader rate of underemployment, the “U6” unemployment rate that includes those out of work, those working part-time involuntarily, and those only searching for work sporadically, ticked down by a tenth of a percentage point to 9.6 percent, the lowest such rate since April of 2008.
At 62.7 percent, the labor force participation remains historically low. Workforce participation has shrunk since the recession, in part because of ongoing demographic changes such as the retirement of the Baby Boom generation and in part because of people quitting because of the difficulty of finding jobs. While economists have debated about the effects of each factor, labor force participation rose in June and hasn’t dropped since the spring of last year.
The rebound in job growth in June, taken together with other signs of resilience in the labor markets such as low unemployment benefits applications, will reassure policymakers that the medium-term prospects for the U.S. economy are bright.
Before Friday’s report, Federal Reserve chairwoman Janet Yellen had expressed concern that the disappointing May jobs report, which initially showed just 38,000 new jobs, could be a “harbinger” of a broader economic slowdown. The United Kingdom’s vote to leave the European Union, an event that injected volatility into global markets, also worried Fed members.
Those factors, especially the “Brexit” vote, meant that Fed officials were not likely to contemplate further rate hikes at upcoming meetings without strong jobs data. Federal Reserve Bank of Cleveland president Loretta Mester laid out that view Thursday, telling the Wall Street Journal that she has “been one of the more positive ones in terms of the outlook for the U.S. economy, and I continue to be positive about it. But I take on board that there is increased uncertainty.”
Beyond the job growth in the information sector that can be attributed to the end of the Verizon strike, job gains were fairly broad in June, with stronger growth in health care and restaurants.
The mining sector lost 6,000 jobs, just the latest blow in the dramatic drop in the price of oil over the past several years. Since peaking in September 2014, the U.S. has lost 211,000 mining jobs, mostly among drillers and the support services that work in oil fields.
