Recently, the Labor Department announced the US economy added 222,000 jobs in June; more than the ~178,000 expected by economist. With its quickest pace of hiring since February, the consistent addition of nearly 200,000 jobs a month and a low unemployment rate, it looks as if the Federal Reserve will continue to hike interest rates in the second half of the year
According to the report released by bureau of labor statistics (BLS), the unemployment rate slightly rose from 4.3 to 4.4 percent. The slight rise is said to reflect the increase in Americans re-entering the labor market.
The monthly report released by the BLS has been closely watched by investors who are interested in the economic data signaling steady growth in the United States; anticipating the moves made by the Federal reserve, the first among major global central banks in moving away from low interest rates that carried markets out of the 2008 crisis. The Federal reserve has raised interest rates three times since late 2016, citing low unemployment, signs of stabilizing inflation, and steady growth.
“We’ve been creating close to 200,000 jobs a month now for more than seven years. That’s just an incredible achievement. And that machine is still humming,” chief economist at Moody’s AnalyticsMark Zandi said on Friday.
The data released shows strong hiring in the professional service, finance, food service, and home healthcare sectors; carrying the recovery and contributing to maintaining an under 5 percent unemployment rate. The largest increase in jobs were seen in the health care sector, where 37,000 jobs were added to the industry.
The more cyclical parts of the US economy, such as construction, mining, and oilfield service showed an increase in hiring as commodity prices stabilize and manufacturing expands. Bouncing back from its pre-election low, the mining industry managed to add 7,000 new jobs.
Wage growth has disappointed many though, as it has failed to keep up with the recent economic expansion. The average hourly wage rose by 2.5 percent. Some economist have taken the lack of wage growth as a sign of the economy still having room to grow before most people who want a job are able to get one.
“If employers indeed really needed those workers and they couldn’t find them, then they would take all the steps they could take to get them. And the first, very clearly, is to increase wages,” senior economist at the Economic Policy Institute Elise Gould said.
Underemployment, which measures people who want to be working full-time but are not, rose from 8.4 percent to 8.6 percent in June, increasing to 5.3 million. Part-time employment has been seen as a persistent problem since the recession ended.
Economists at Deutsche Bank characterized Friday’s jobs report as “perfect” for risk assets like stocks. On Friday, US equities trading with the S&P 500 closed up 0.64% at $2,425.18, while assets like the 10 year Treasury and gold fell.
“The job market remains in good shape eight years into the economic expansion. The big increase in jobs in June, with upward revisions to job growth in April and May, has alleviated concerns in recent months about slowing job growth,” said Gus Faucher, chief economist at PNC Financial.
Economist argue that the strong job gains reflect a healthy labor market.
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