Economy adds 195K jobs; unemployment 7.6 percent
In this Monday, June 24, 2013, photo, a job seeker gets her resume critiqued at a career fair, in King of Prussia, Pa. U.S. employers added a robust 195,000 jobs in June and many more in April and May than previously thought. The job growth raises hopes for a stronger economy in the second half of 2013. (AP Photo/Matt Slocum)
In this June 21, 2013 photograph a sign seeking drivers is posted outside the Pearl, Miss., customer service center for Central Transport, a long haul transport trucking company. U.S. employers added a robust 195,000 jobs in June and many more in April and May than previously thought. The job growth raises hopes for a stronger economy in the second half of 2013. (AP Photo/Rogelio V. Solis)
Employers are sending a message of confidence in the economy – hiring more workers, raising pay and making the job market appear strong enough for the Federal Reserve to slow its bond purchases as early as September.
The economy gained a robust 195,000 jobs in June and many more in April and May than previously thought. The unemployment rate remained 7.6 percent in June because more people started looking for jobs – a healthy sign – and some didn’t find them. The government doesn’t count people as unemployed unless they’re looking for work.
The Labor Department’s report yesterday pointed to a U.S. job market that’s showing surprising resilience in the face of tax increases, federal spending cuts and economic weakness overseas. Employers have added an average of 202,000 jobs for the past six months, up from 180,000 in the previous six.
The job growth is being fueled in part by consumer spending and the housing recovery. Consumer confidence has reached a 5½-year high and is helping drive up sales of homes and cars. Hiring was especially strong in June among retailers, hotels, restaurants, construction companies and financial services firms.
“The numbers that we’re seeing are more sustainable than we thought,” said Paul Edelstein, an economist at IHS Global Insight, a forecasting firm. “We’re seeing better job numbers, the stock market is increasing and home prices are rising.”
Average pay also rose sharply last month. It’s exceeded inflation this year after barely keeping pace since the Great Recession ended four years ago. Average hourly pay rose 10 cents in June to $24.01. Over the past 12 months, it’s risen 2.2 percent. Over the same period, consumer prices have increased 1.4 percent.
Yesterday’s report showed that the U.S. economy added 70,000 more jobs in April and May than the government had previously estimated – 50,000 more in April and 20,000 more in May.
The Fed has been buying $85 billion in Treasury and mortgage bonds each month since late last year. The purchases pushed long-term interest rates to historic lows, fueled a stock rally and encouraged consumers and businesses to borrow and spend. The low rates have helped support an economy that’s had to absorb government spending cuts and a Social Security tax increase that’s shrunk paychecks this year.
John Silvia, chief economist at Wells Fargo, said he thinks the Fed will announce at its September policy meeting that it will start reducing its bond purchases, perhaps to $75 billion a month.
Chairman Ben Bernanke has said the Fed’s bond buying could end around the time unemployment reaches 7 percent. The Fed foresees that happening around mid-2014.