United States jobs growth faster than expected
- Author: Terrell Bush Jul 08, 2017,
Jul 08, 2017, 0:19
The dollar gained across the board on Friday in choppy trading after a report showed the US economy created far more jobs than expected in June and the previous months, keeping the Federal Reserve on track to raise interest rates at least once this year.
However, the U.S. unemployment rate ticked higher to 4.4 per cent, from 4.3 per cent previously, and earnings were up only 2.5 per cent year on year, slightly lower than expected. A broad measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, rose to 8.6 per cent last month from 8.4 per cent in May, which was the lowest since November 2007.
Employment gains have averaged 180,000 per month in 2017, a shade below the 187,000 in 2016.
Average wages rose 2.5% year-on-year, which analysts said was a sign the market still had room to improve.
Wage growth, however, remained muted, with average hourly earnings rising 2.5 percent on an annualized basis, essentially unchanged from the previous month. That's below the 3.5 percent pace typical of a healthy economy.
To get higher than the middle of that range, economists say, will take legislative action on tax cuts and infrastructure spending that, so far, has been absent.
But that doesn't mean employers didn't want to lower pay during the recession, given their falling revenue and profits.
The number of people employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 5.3 million, changed little in June.
Slightly more Americans applied for unemployment benefits last week.
The Federal Reserve raised rates by a further 0.25 per cent last month to 1-1.25 per cent.
At the current pace, the USA would add about 1.9 million jobs in 2017. They argue that a basic rule of economics still holds: As the supply of workers falls, its price (i.e., paychecks) will rise - eventually.
"All this is probably doing is just confirming for the Fed that we need to continue the process of normalization", said Scott Wren, senior global equity strategist for the Wells Fargo Investment Institute. "A tight labor market will lead to greater wage growth".
The "real" unemployment rate, otherwise known as the U-6 measure, was 8.4 percent in May, which increased to 8.6 percent in June.
But many workers may not believe it until they see it.