The US economy added 222,000 new jobs in June, reversing a worrying slowdown in jobs growth for Donald Trump but once again highlighting America’s low-wage economy.
Economists had been expecting the US to add about 178,000 jobs over the month, but the latest numbers from the Bureau of Labor Statistics comfortably beat those estimates. Healthcare and food services showed big monthly gains.
The unemployment rate moved up marginally to 4.4%, but remains at lows unseen since 2001 and rose as more people came off the sidelines and started looking for work.
This month’s numbers came as economists have worried that the US economy is struggling to create large numbers of new jobs despite Trump’s promise of “JOBS! JOBS! JOBS!”
US employers added just 138,000 jobs in May, the third month of relatively soft growth in the job market. But those figures were revised up this month to 152,000.
Employment growth has averaged 180,000 per month thus far this year. In comparison, payroll employment growth averaged 187,000 a month in 2016 and 226,000 in 2015.
The latest figures will increase the probability that the Federal Reserve will once again raise interest rates this year. The Fed raised short-term interest rates last month for the third time since December, with its chair, Janet Yellen, citing the “very strong labor market”.
June marked the 81st consecutive month of job growth in the US, but the recovery from the depths of the 2007 recession has been marked by slow wage growth and a worryingly large number of people in part-time work.
Once again, the largest growth areas were in low-paying service industry jobs, and not in the higher-paying blue-collar industries Trump has pledged to support. Mining, an area in which Trump has promised to bring back jobs, added 8,000 positions over the month, but manufacturing and construction saw little change. Healthcare added 37,000 jobs over the month, while food services and drinking places added 29,000 jobs, in a sector that has added 277,000 jobs over the year.
Wages once again grew only marginally in June, rising 2.5% from a year ago and little changed from prior months. These numbers are not adjusted for inflation, so “real” wage growth is close to 1%.
Some 5.3 million people were employed part time for economic reasons (sometimes referred to as involuntary part-time workers), little changed from previous months. The Bureau said these individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.
“Overall, this morning’s report shows a recovery continuing to chug along, but with wage growth below target levels, it is abundantly clear that we have a ways to go before we reach genuine full employment – where workers see better wage growth and workers who have been sitting on the sidelines see better job opportunities,” wrote Elise Gould, senior economist with the Economics Policy Institute.
Friday’s government figures come a day after ADP, the US’s largest private payroll processor, released its latest monthly tally of job gains. The report showed jobs growth slowed last month. According to ADP, the private sector added 158,000 new jobs in June; economists surveyed by Reuters had been expecting a gain of 185,000.
Small businesses, a leading driver of job growth, added just 17,000 jobs in the month, with the smallest of small businesses, those employing one to 19 people, recording zero jobs added. Once again, the service sector was the largest new employer.
Overall, hiring may be weakening because the number of available workers has declined with the unemployment rate, now at a 16-year low. Mark Zandi, chief economist of Moody’s Analytics, said: “The job market continues to power forward. Abstracting from the monthly ups and downs, job growth remains a stalwart between 150,000 and 200,000. At this pace, which is double the rate of labour force growth, the tight labour market will continue getting tighter.”