U.S. job growth rebound calms fears of economic swoon

U.S. job growth rebound calms fears of economic swoon

A powerful rebound in hiring last month eased fears about an economic downturn as the U.S. expansion enters its eighth year, putting the nation on solid footing to absorb global shocks and market turbulence

Employers added a seasonally adjusted 287000 jobs in June for the strongest job growth in eight months, the Labor Department said. Nearly every sector of the economy added workers to power a dramatic swing from May’s dismal payroll gain of 11000, which was the weakest reading since the U.S. stopped shedding jobs in 2010.

The pace of job creation has slowed since the winter. But unlike a sharp drop-off that might signal a possible recession, “this looks more like a graceful slowing into a lower channel of job growth, which is normal at this late stage of the business expansion,” Morgan Stanley chief U.S. economist Ellen Zentner said.

The unemployment rate rose to 4.9 % in June from 4.7 % the prior month, retracing most of its sharp decline from 5% in April. That was partly due to a rebound in the size of the workforce that sent the labour-force participation rate up a tick to 62.7 %.

Among the many positive signs: Pay raises appear to be picking up, albeit gradually, as employers compete for a shrinking pool of available workers. Average hourly earnings for private-sector workers rose just 0.1 % in June from the prior month. But wages were up 2.6 % from a year earlier, matching the fastest annual growth rate since the summer of 2009.

Through short-term swings in the data, hiring across the U.S. economy has decelerated this year. Payroll growth averaged 147000 in the second quarter compared with 196000 in the first three months of the year and 229000 in 2015. Job growth could be moderating as labour-market slack diminishes, corporate profits come under pressure and overall economic growth remains tepid.

www.wsj.com


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