US job market rebounds with June hiring surge of 287000

by Douglas Stevenson Julio 10, 2016, 2:56

The Labor Department said the U.S. economy added 287,000 jobs in June, well above the 180,000 that economists had forecast.

The May slowdown was a red flag. The vast majority of jobs added in those sectors are likely to pay the minimum wage. In fact, hiring in June hugely exceeded expectations. They think May was a fluke.

The weak job growth in May was partly due to a since-resolved strike by Verizon (VZ) workers, which contributed to the loss of 39,000 jobs in the information sector. And the mild winter weather across much of the US could have accelerated a lot of the usual spring hiring to earlier in the year.

The May jobs data had increased nervousness that the U.S. economy was slowing down, adding to downward pressure on the dollar and contributing to the Federal Reserve's decision last month to put off an interest rate hike.

The government's monthly status report Friday on the employment market showed a surge in hiring last month, after payroll growth all but halted in May. The report will show the job growth and the unemployment rate for last month.

Specifically, an estimated 60,000 of June's new jobs came in the leisure and hospitality industries - while another 30,000 positions were created in the retail industry. Previously, officials had reported that 38,000 had been added during that month. "That's to be expected when you reach what I would argue is full employment". The labour force participation rate, which indicates the share of working-age people who are employed or looking for work, crept up to 62.7 per cent from 62.6 per cent.

A broad measure of unemployment that includes people who want to work but have given up searching and those working part-time because they can not find full-time employment fell 0.1 percentage point 9.6 percent, the lowest since April 2008.

Nevertheless, wage growth still appears to have remained sluggish. They finally rose to 2.5% in May. The Fed went on hold in June after the weak jobs report in May and uncertainty about what would happen with the Brexit vote.

Though strong payrolls data would spark fresh speculation of a US rate increase later this year, it would also trigger a fresh round of currency weakness and likely policy tightening in emerging markets. In June, the U.S. central bank decided for the fourth time this year not to raise U.S. interest rates.

U.S. bond yields, which had plunged in recent weeks with the 10-year Treasury hitting a record low, spiked higher in early trade. A stronger report leaves the door open for one or even two.

Economists believe a rate hike by the Fed is a long way off and the central bank is unlikely to be swayed by a stronger non-farm payrolls report in June in the wake Britain's vote to leave the EU.

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