USA First Look

US employers add robust 222K jobs in June despite slow-growing economy

Friday's jobs report suggested that after eight years of a grinding but resilient recovery, companies still have room to hire at a healthy pace. 

A customer enters a Best Buy store in Hialeah, Fla. on Monday, May 22, 2017.
Alan Diaz/AP
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Caption
  • Christopher S. Rugaber
    Associated Press

United States employers added a robust 222,000 jobs in June, the most in four months, a reassuring sign that businesses may be confident enough to keep hiring despite a slow-growing economy.

The government also revised up its estimate of job growth for April and May by a combined 47,000. Hiring has averaged nearly 180,000 jobs a month so far this year, only slightly below last year's pace. The unemployment rate ticked up to 4.4 percent from 4.3 percent in May, a 16-year low, the government said Friday. The jobless rate rose because more Americans began looking for work and not all of them found it.

Friday's jobs report suggested that after eight years of a grinding but resilient recovery, companies still have room to hire at a healthy pace. Though the rate of job growth has slowed since 2014 and 2015, it's still drawing in people who had previously stopped looking for work. The proportion of adults with jobs has reached 60.1 percent, just below April's figure, which was the highest since the recession ended in 2009.

Even with the strong hiring, average hourly pay rose just 2.5 percent in June from a year earlier, below the 3.5 percent typical of a healthy economy. Employers in many industries remain reluctant to raise pay.

The numbers signal that economic growth should be decent, if not robust, through 2017, said John Silvia, chief economist at Wells Fargo.

"It's a good report for the economy," he said. "It really does say that we've got 2 percent-plus growth for the second half of the year."

The June jobs report arrives against the backdrop of an overall mixed picture of the US economy.

Home sales are chugging along, though a shortage of properties for sale suggests that the pace of purchases could flag. And auto sales are slowing from last year's record pace, causing some automakers to cut jobs.

At the same time, surveys of manufacturing and service companies indicate that growth in both sectors may be accelerating. Factory activity is expanding at the fastest pace in three years, the Institute of Supply Management, a trade group of purchasing managers, found.

The economy grew at just a 1.4 percent annual rate in the first three months of 2017, below even the sluggish 2 percent average pace in the eight years since the recession ended. But most economists have forecast that growth rebounded in the April-June quarter to an annual rate of 2.5 percent or higher.

Still, the economy appears resilient enough for the Federal Reserve to keep raising its benchmark interest rate. The Fed has signaled its belief that the economy is on firm footing as it enters its ninth year of recovery from the recession.

Consumers have expressed confidence in the economy and, accordingly, are spending more than they did in the first three months of the year.

Businesses advertised 6 million open jobs in May, a record high, which suggests that they are struggling to find the workers they need. Normally, as the number of unemployed dwindles, employers raise pay to attract job seekers.

Yet the influx of job seekers last month might have offset some upward wage pressures. Employers had more applicants to choose from.

Mark Zandi, chief economist at Moody's Analytics, said that many workers are too cautious to push for raises, partly because of the lingering impact of the Great Recession, when nearly 9 million people lost jobs.

And some businesses have decided they can't raise prices enough to afford meaningful pay raises. That cycle of limited wage gains and low prices has kept inflation in check, to the consternation of the Fed, which wants to see slightly higher inflation to justify its campaign to raise short-term rates.

Still, many business owners are seeing greater confidence among their customers. Mark Dix, a general contractor in Knoxville, Tenn., says he has seen a jump in demand for the renovation, painting, and home construction services he provides. He employs 15 people.

"We're seeing a boom in people who are willing to take out a loan and build a home," he said. "I would hire another half-dozen people today if I could find the skilled labor."

Drug use is a problem among many people he considers for jobs, Mr. Dix said. And many men in the area rely on disability benefits, he added.

The June jobs report showed broad hiring across numerous industries. Health care posted the biggest job gain – 59,100 – despite uncertainty around health care legislation in Congress. Governments added an unusually high 35,000 positions, nearly all of them at the local level. Construction companies added 16,000, and mining, which includes oil and gas drilling, gained 8,000.

Restaurants and hotels added a healthy 36,000 jobs. Professional and technical services, which includes such higher-paying occupations as engineering and accounting, gained 19,000.

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