U.S. hiring strong in June; Unemployment Rate rises as more enter labour force

Nonfarm payrolls rise by 213000; unemployment rate up to 4.0 %

Americans are flocking to the job market as the already robust economy revs up.

Hundreds of thousands of Americans started looking for jobs and employers added 213000 to their payrolls last month, the Labour Department said Friday. Many of those job seekers were snapped-up by employers while some were counted as unemployed while they sought out work, which helped push the jobless rate up to 4.0 %, from an 18-year low of 3.8 % in May.

Those new entrants to the labour force could provide the raw material needed to support accelerating economic growth nine years after the recession ended.

“It’s clear that we’re not running out of workers,” said Kate Warne, an economist at Edward Jones. “There is additional leeway for job growth to remain strong.”


Katie Garrison, 36 years old, is among those finding opportunities. She was out of the labour force for six years while caring for her young children. Last month, two weeks after she started searching, she was hired as a part-time government attorney.

“I was expecting it to be months and months,” Ms. Garrison said. “It was actually easier this time to get a job than any of us expected.”

New entrants to the labour force—be they parents, recent graduates or those previously frustrated by their prospects—have caused the civilian labour force to grow by an average of about 250,000 workers each month this year. That is the best six-month stretch of Americans entering the labor market in more than two years. In June, the share of American adults working or looking for a job rose by 0.2 percentage point to 62.9%. The gain runs counter to the longer-running trend of an aging population that is less likely to work.

A​ greater share of Latino Americans sought jobs last month—and found them. The Latino unemployment rate fell to a record low 4.6 %. Labour-force participation ​also ​rose in June for women, black people and those with less than a college education. ​But those additional job seekers caused the unemployment rate ​to increase ​for all three groups from historic lows.

Naafee Rone has only a high-school diploma. That left the 23-year old from Baltimore’s east side to bounce between short-term jobs, including cleaning airplanes and working fast-food counters. Last year, he left the labor force to receive about five months of job training from NPower, a nonprofit serving young adults. After an internship, he was hired this year as a support analyst at Port Networks. He earns USD 17.50 an hour, more than he did at those prior gigs, and works in an office tower overlooking the city’s Inner Harbour.

“This is amazing,” he said. “I have a beautiful view, I work independently, and I have the potential to make more.”

Economists expected workers to be in short supply this year and for hiring to slow. So far, the opposite has happened. The pace of hiring has accelerated compared with the average for all of 2017.

Aultman Health Foundation, a hospital operator in Canton, Ohio, has added hundreds to its payroll of 6600 this year. It is still receiving plenty of applicants for open positions, said Susan Olivera, vice president for human resources. The challenge, especially for nursing applicants, is that many are fresh out of college and lack the needed experience.

To respond, Aultman started “boot camps” in May where nursing students are allowed to work as assistants in critical-care wards so they can gain the necessary background to step into challenging roles more quickly“It makes for a much smoother transition,” Ms. Olivera said. It also eases recruiting battles. “We want experienced talent, but that’s what the other hospitals want as well.”

The health-care sector added 25200 jobs last month. Professional and business services—including engineering services, consulting and temporary help—added 50000 jobs. Employment in manufacturing grew by 36000. Employment fell at retailers.

Solid hiring has been a feature of the economy since 2010. U.S. employers have added to payrolls for 93 straight months, extending the longest continuous jobs expansion on record.

What might be different now is the other aspects of the U.S. economy that appear to be picking up steam. Forecasting firm Macroeconomic Advisers lifted its projection for the second-quarter economic growth rate to 4.9 % Friday. Barclay’s estimates a 5 % rate, well above the recent pace of 2 % gains.

That view was bolstered by a separate Commerce Department report Friday showing the trade deficit narrowed for the third straight month in May, driven by an increase in exports that will add to U.S. output. Spring data on gross domestic product will be released later this month.

Such high rates of economic growth—stoked by new tax cuts and unusually high soybean exports—may not be sustainable. Still, Macroeconomic Advisers projects the economy will have grown 3.1% at the end of this year from the end of 2017—setting 2018 up to the best year for growth in more than a decade.

The movement of more workers into the labour force could help to keep the economy from overheating—for example by leading to an upsurge of wages and inflation—and might also keep the Federal Reserve from veering from its plan to raise short-term interest rates only gradually in the months ahead.

But there are risks. Trade-policy gyrations have added a new level of uncertainty to the global economy. In the U.S., rising interest rates could cool purchases of big-ticket items such as homes and cars, and recent accelerating inflation, including higher energy prices, takes a bite out of workers’ paychecks.

Wages are rising at a consistent, but unspectacular rate. Average hourly earnings for all private-sector workers increased 5 US cents last month to USD 26.98. Wages rose 2.7 % from a year earlier in June. Wages have not increased at better than a 3 % rate from a year earlier since the recession ended in 2009. However, hourly earnings for non-managers are rising at the fastest pace in nine years this spring, suggesting the benefits of economic growth are being felt more widely.