US jobs growth sweeps away fears for recovery
Employment growth in the US was strong across the board in June, raising hopes for the economy as it heads into the second half
US employment growth jumped in June and the unemployment rate declined to nearly a six-year low of 6.1 per cent, effectively dispelling fears about the economy's health and underscoring its momentum heading into the second half of 2014.
Non-farm payrolls increased by 288,000 jobs, the Labour Department said yesterday. Data for April and May were revised to show a total of 29,000 more jobs created than previously reported. Economists polled by Reuters had forecast a gain of 212,000 jobs in June. It was the first time since the technology boom in the late 1990s that employment has grown above a 200,000-jobs pace for five straight months.
"It's strong across the board and there were upward revisions in the prior two months," Stuart Hoffman, chief economist of PNC Financial Services in Pittsburgh, said.
"This is obviously very strong across the board, the only other thing you might have hoped for is an uptick in participation," Michael O'Rourke, chief market strategist of Jones Trading in Connecticut, said.
The closely watched employment report added to robust auto sales in June and data showing a steady manufacturing expansion, suggesting a plunge in economic output in the first quarter was a weather-driven anomaly. Gross domestic product contracted at a 2.9 per cent annual rate in the January-March period, causing a sharp downgrading of growth estimates for this year. Growth in the second half of the year is forecast around a 3.5 per cent pace.The sturdy pace of job gains was flagged by reports on Wednesday showing companies hired the most workers in 1 1/2 years in June, with small business hiring increasing for a ninth straight month.
The 0.2 percentage point drop in the unemployment rate in June to its lowest level since September 2008 came even as the labour force swelled. The unemployment rate has declined from a peak of 10 per cent in October 2009, driven by job gains and a shrinking labour force. The labour force participation rate was steady at 62.8 per cent.
The improving tone of the labour market will be welcomed by the Federal Reserve and could spur debate on the timing of the first interest rate increase by the US central bank.
Fed chairman Janet Yellen has argued there is still considerable slack in the labour force, citing the low labour force participation, which she says partly reflects the departure of discouraged job seekers who could be enticed back into the workforce if conditions were to tighten.
Job gains in June were across all sectors. Manufacturing payrolls increased for the 11th straight month. Construction jobs advanced for the sixth consecutive month of gains. Services industries employment jumped by 236,000, the biggest increase since October 2012.