US job growth cools, unemployment rate rises to 6.2 per cent
US job growth slowed more than expected last month and an unexpected rise in the unemployment rate pointed to some slack in the labour market that could give the Federal Reserve room to keep interest rates low for a while.
Nonfarm payrolls increased 209,000 last month after surging by 298,000 in June, the Labour Department said yesterday.
Data for May and June were revised to show a total of 15,000 more jobs created than previously reported, showing underlying momentum.
July marked the sixth straight month that employment has expanded by more than 200,000 jobs, a stretch last seen in 1997. The one tenth of a percentage point increase in the unemployment rate to 6.2 per cent came as more people entered the labour market, a sign of confidence in the job market.
"It still points to a job market and an economy that is improving, but we also have the absence of wage pressures building which is becoming another concern for investors," said Sean Lynch, the managing director of global equity and research strategy at Wells Fargo bank.
"The report showed decent growth but nothing extraordinary. Nothing to get excited about. But this won't force the Fed to raise rates anytime soon," added Mark Grant, the managing director of Southwest Securities.
Average hourly earnings, which are being closely monitored as a potential signal of reduced slack that could prompt the Fed to raise rates, rose only one US cent. That left the annual rate of increase at 2 per cent, still well below the levels that would make Fed officials nervous.
The cooling in hiring is unlikely to change perceptions about strong economic growth in the third quarter.
The economy grew at a 4 per cent annual pace in the second quarter after shrinking at a 2.1 per cent rate in the first three months of the year. While restocking by businesses lifted the figure, growth is seen remaining sturdy for the rest of 2014.
The employment report, already closely watched by financial markets around the globe, is set to garner even more attention in the months ahead, as investors seek to gauge when the Fed is likely to raise benchmark interest rates from near zero, where they have been since December 2008.
The jobless rate has declined from a peak of 10 per cent in October 2009, but much of the drop has been because Americans have left the workforce. The labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job, increased to 62.9 per cent in July.