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US employers add 288k jobs in June

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Posted: July 3, 2014 9:30 a.m.
Updated: July 3, 2014 10:03 a.m.
US employers add 288k jobs in June

In this Thursday, June 12, 2014 photo, people wait in line for the Cleveland Career Fair in Independence, Ohio. U.S. employers accelerated their hiring in June, adding a robust 288,000 jobs and helping drive the unemployment rate to 6.1 percent, the lowest since September 2008, the Labor Department reported, Thursday, July 3, 2014.


WASHINGTON - U.S. employers accelerated their hiring last month, adding a robust 288,000 jobs and helping drive the unemployment rate to 6.1 percent, the lowest since September 2008.

It was the fifth straight monthly job gain above 200,000 - the best such stretch since the late 1990s tech boom. Over the past 12 months, the economy has added nearly 2.5 million jobs - 208,000 a month, the fastest year-over-year pace since May 2006.

Thursday's jobs report from the Labor Department made clear that the U.S. economy is moving steadily closer to full health after having shrunk at the start of the year.

June's job gain followed additions of 217,000 jobs in May and 304,000 in April, figures that were both revised upward. Monthly job gains so far this year have averaged 230,833, up from 194,250 in 2013.

Investors appeared pleased. When stock markets opened Thursday, an hour after the government released the jobs report, the Dow Jones industrial average traded above 17,000 for first time.

The unemployment rate dipped last month from 6.3 percent to its lowest level since the financial crisis struck at full force in the fall of 2008 with the bankruptcy of the Wall Street firm Lehman Brothers.

"Since February, this has now become a textbook jobs expansion," said Patrick O'Keefe, director of economic research at the consultancy CohnReznick. "It is both broad and accelerating."

The job gains in June were widespread. Factories added 16,000 workers, retailers 40,200. Financial and insurance firms increased their payrolls by 17,000. Restaurants and bars employed 32,800 more people last month. Only construction, which gained a scant 6,000, appeared to reflect the slow recovery of previous years.

Job growth has averaged 272,000 over the past three months. In May, the economy surpassed its jobs total in December 2007, when the Great Recession officially began.

The number of long-term unemployed has dropped by 1.2 million over the past year to just under 3.1 million. That's half what it was three years ago.

Still, researchers at the liberal Economic Policy Institute estimate that 6.7 million more jobs would have been needed to keep up with population growth.

The challenge is whether the job gains will pull more Americans back into employment and lift wages that have barely budged. Many people who lost jobs during the recession and were never rehired have stopped looking for work. Just 62.8 percent of adult Americans are working or are looking for a job, compared with 66 percent before the recession.

Average pay has grown just 2 percent a year during the recovery, roughly in line with inflation and below the long-run average annual growth of about 3.5 percent.

Despite the improving job market, most employers still have plenty of applicants to choose from, and many workers with jobs don't have enough confidence to look for better-paying ones.

The lack of strong wage growth means the Federal Reserve may not feel pressure to start raising short-term interest rates soon as a way of controlling inflation.

The economy actually shrank in the first three months of this year at an annual rate of 2.9 percent. It was the sharpest quarterly contraction since the recession. Ferocious winter storms and freezing temperatures caused factories to close and prevented consumers from visiting shopping malls and auto dealers.

Still, the winter failed to freeze hiring and job growth has continued with little to no interruption. This should help to speed economic growth because more jobs lead to more paychecks to spend.

Most economists say annualized growth is tracking a solid 3 percent to 3.5 percent in the current second quarter. Growth over the course of the entire year should be closer to 2 percent for the entire year, roughly similar to the 1.9 percent increase in gross domestic product achieved last year.

Other than the weak growth at the start of the year, some other signs point to the improving health of the economy.

Auto sales rose at the fastest pace in eight years in June. Dealers unloaded vehicles at an annual pace of 16.98 million last month. Factory orders picked up last month as well, according to a report this week by the Institute for Supply Management.

Home sales also strengthened in May, after having sputtered in the middle of last year when higher mortgage rates and rising prices hurt affordability.

 

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