Published: Mon, July 09, 2018
Markets | By Erika Turner

Wage gains slow, unemployment up from 18-year low

Wage gains slow, unemployment up from 18-year low

U.S. non-farm employment rose by 213K positions in June, but the unemployment rate climbed to 4.0%, up from 3.8% in May, according to the Bureau of Labor Statistics. But in Friday's revised figures, BLS reports that the legal services industry actually gained 300 jobs in May, compared with April. The labor force participation has increased, which brought the unemployment rate up slightly from 3.8 percent to 4 percent. That marks a 72 cent increase for average hourly earnings over the year so far.

Construction jobs have increased by 282,000 over the year to meet housing demand, and mining has tacked on 95,000 jobs as energy prices jump.

Update: Here's another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.

The Hispanic-Latino unemployment rate was 5.9% in January of 2017, the month President Trump took office.

"Overall, this "not too hot, not too cold" report supports our call for four Fed rate hikes in total this year", Gregory Daco, head of USA macroeconomics at Oxford Economics in NY, said in a note. Some economists project economic output rose at better than 4% annual pace in the second quarter for the first time since 2014.

Not all of those who re-entered the market were able to find jobs, which contributed to the uptick in the unemployment rate.

"The solid 213,000 gain in non-farm payrolls in June, which followed an even stronger 244,000 rise in May, illustrates that labor market conditions remain unusually strong", said Andrew Hunter, U.S. economist at Capital Economics.

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"I'm really excited to see that the labor force is growing", said Catherine Barrera, chief economist of the online job site ZipRecruiter.

Wage growth slowed in June.

Still, if the additional jobs and that sort of wage growth don't make you smile, the rising unemployment rate should.

Jim O'Sullivan, chief U.S. economist at High Frequency Economics, said gains have averaged 215,000 month so far this year, up from 182,000 "more than strong enough to keep the unemployment rate trending down over time". The agency says more people were seeking job opportunities and that forced the rate up to 6%. It has declined three-tenths of a percentage point this year and is near the Fed's estimate of 3.6 percent by the end of this year.

New entrants, including blue-collar workers and teenagers, shouldn't have much trouble finding a job. While improving prospects for employment and wages are helping attract people from the sidelines of the job market, the retirements of older workers are among factors that have been exerting downward pressure on participation.

In addition, the data should encourage the Federal Reserve to hike interest rates at least once more this year (with the balance of risks tilting toward two hikes).

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