Published: Sun, July 08, 2018
Markets | By Otis Pena

U.S. unemployment rate jumps even though employers add more jobs than expected

As more Americans entered the labor force but not all found jobs, US unemployment rate in June rose slightly from 3.8 percent in May, the lowest level since April 2000.

The job growth wasn't enough to keep the unemployment rate from rising from 3.8 percent to 4 percent, the government said July 6.

The employment increase last month beat economist expectations for a 20,000 gain and was the second highest so far in a year where job creation has been sluggish.

The US economy created a higher-than-expected 213,000 jobs last month, official figures show.

"This is a good job-creation number, but on the other hand we see still continued soft wage growth", said Michael Feroli, chief USA economist at JPMorgan Chase. The average hourly wage has increased by just 2.7 percent in the a year ago.

In Europe, the assault on working class wages and conditions has primarily taken the form of brutal austerity policies to slash social programs and increase the tax burden of workers to pay for the subsidies offered to European banks.

Think about it. Suddenly, because they feel confident that a job may exist for them, 601,000 people got off the couch and looked for work.

A steady pace of hiring and gradually rising wages, along with lower taxes, are helping underpin consumer spending and propelling a rebound in United States growth this quarter.

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"In the past six months, people were just leaving right and left", she said.

"Let's remember that for some time, the unemployment rate has been below the level typically associated with 'full employment, ' but the relatively robust level of hiring being seen suggests there's more room" for the jobless rate to drop, he added.

The unemployment rate in Windsor dipped slightly last month, but so too did the labour participation rate.

Service providers boosted payrolls by 149,000, led by a 54,000 gain in education and health services, and 50,000 in professional and business services. It was "general merchandise stores, including warehouse clubs and supercenters" that initiated the big cuts, -18,000 jobs.

Nonfarm payrolls climbed 213,000 after an upwardly revised 244,000 advance, Labor Department figures showed Friday. Over the past year, average monthly payroll gains have hovered around 200,000, and hiring has been running ahead of growth in the labor force.

The bottom line is that the buoyancy in June's US labor market statistics will reaffirm the Federal Reserve's view that the economy is doing super-well at present and that further interest rate hikes will be justified. Economists are forecasting that economic growth accelerated to an annual pace of roughly 4 per cent during the April-June quarter, about double the previous quarter's pace.

June also saw more people joining the workforce, meaning more people either had a job or started looking for jobs.

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