After a May lull, the US workforce experienced a surge in job growth in June with the creation of 287,000 new jobs.
The healthy June jobs report allays fears that the dip in job growth in May and the political uncertainty that accompanied Britain’s Brexit in June will create a long-term, adverse effect on the growth of the workforce within the United States. Even a slight increase in the unemployment rate isn't disheartening, as it signals that more people are looking for jobs.
The recently revised May jobs report indicated that only 11,000 jobs were created (revised from an earlier report of 38,000) that month, a low that hasn’t been seen since September 2010. The low numbers, combined with the political uncertainty after Britain’s EU referendum, stoked worries that growth in the job market and the economy at large were at a plateau.
The highly anticipated June jobs report indicates that Brexit has not deterred US job growth, at least not this month. Economists surveyed by Bloomberg expected job growth in June to top at 180,000 jobs, but the report greatly surpassed those expectations. The 287,000 jobs added is the highest number seen since October 2015.
The leisure and hospitality employment sector saw the greatest increase, adding 59,000 jobs. Health care and social assistance followed with 58,000. The financial services sector also saw robust growth with 16,000 new jobs. The information sector grew by 44,000, but the majority of that growth is attributed to the end of the Verizon worker strike, which took 35,000 jobs off the books in May.
The unemployment rate increased more than expected. After dipping to a surprisingly low 4.7 percent in May, unemployment ticked up 0.2 percent to reach 4.9 percent in June. Economists surveyed by Reuters had predicted 4.8 percent unemployment. However, a higher unemployment rate signals that more individuals may be starting the search for a job.
The U6 rate, which includes the number of unemployed people looking for a job, as well as those too discouraged to look for a job and those working part-time who are looking for a full-time position, decreased to 9.6 percent from 9.7 percent in May. Total participation in the labor force is up 0.1 percent from 62.6 percent in May.
"The June jobs report is the kind we want to see more of," Elise Gould, an economist with the Economic Policy Institute, writes in an e-mailed statement. "287,000 jobs a month moves the recovery forward, not only pulling in the growing working age population, but also chipping away at remaining slack."
Still, the world is waiting to see the full impact of Britain’s June 23 vote to exit the EU. Kathy Bostjancic, an economist at Oxford Economics USA in New York, told Bloomberg Friday that a strong jobs report may be “old news.” “Now we’re in the brave new world of post-Brexit. That’s the risk with the payrolls data -- it could be dismissed because of that.”
Though the impact of Brexit remains to be seen, what is certain is that there will be great interest in what the July jobs report holds after the June surge. "If July payrolls show continued strength, a healthier trend reading of job growth would be consistent with reduced recession risk, in our view," an emailed report from Barclays Research states.