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Jobs Roar Back With Gain of 287,000 in June, Easing Worry Jobs Roar Back With Gain of 287,000 in June, Easing Worry
(about 2 hours later)
With the Republican and Democratic national conventions just weeks away, the government reported on Friday that employers added 287,000 workers in June, a vigorous rebound as the presidential nominees get ready to present their economic visions. Quashing worries that job growth was flagging, the government on Friday reported that employers increased payrolls by 287,000 in June. It was an arresting surge in hiring just weeks before the Republican and Democratic conventions where the presidential nominees will present their competing economic visions.
The official unemployment rate rose to 4.9 percent, from 4.7 percent. And average hourly earnings ticked up again, continuing a pattern set by three months of rising wages. The official unemployment rate did rise to 4.9 percent, from 4.7 percent, but that was largely because more Americans re-entered the work force. And average hourly earnings ticked up again, continuing a pattern of rising wages that brought the yearly gain to 2.6 percent.
The welcome report on Friday showed the largest single monthly job gains since October 2015. The three-month average of monthly gains rose to 147,000. “Wow, this one takes my breath away,” said Diane Swonk, an independent economist in Chicago.
An unexpectedly grim employment report in May combined with Britain’s vote to leave the European Union had fanned wider worries that the American economy was in danger of stalling. And those fears persuaded the Federal Reserve last month to oppose any near-term increase in its benchmark interest rate.
The latest report gives the Fed “a cushion,” Ms. Swonk said, to consider a bump in rates later this year.
Financial markets rallied on the news, with stocks up about 1 percent in early trading on Friday.
When it comes to presidential elections, the economic trend is more important than any particular number, said Lynn Vavreck, a professor of political science at University of California, Los Angeles. “As long as it’s going in the right direction, that’s a good sign for the incumbent party,” she said.
Every monthly jobs report provides only a fleeting and incomplete picture, and a strike by more than 35,000 Verizon workers had artificially held down May’s totals. Concerns persist about the vitality of the economic recovery, which reached the seven-year point this month.
But Friday’s report, with the largest single monthly job gain since October 2015, helped blow away some of the cloudiest forecasts. The three-month average of monthly gains rose to 147,000, after taking into account the Labor Department’s slightly downward revision of the estimates for April and May.
“This report should ease any fears that a persistent slowdown or recession is coming soon in the U.S.,” said Dean Maki, chief economist at Point72 Asset Management. “The service sector is where the real strength is, with 256,000 hires, but the gains were widespread across sectors.”“This report should ease any fears that a persistent slowdown or recession is coming soon in the U.S.,” said Dean Maki, chief economist at Point72 Asset Management. “The service sector is where the real strength is, with 256,000 hires, but the gains were widespread across sectors.”
The unexpectedly grim employment report in May had been disturbing enough to convince every voting member of the Federal Reserve’s policy-making committee last month to oppose any increase in its benchmark interest rate, as the official account of the meeting, released this week, revealed. Mr. Maki pointed out that the vigorous report was in line with several other encouraging signs. New claims for unemployment benefits have stayed at rock-bottom levels, consumer spending is strong, the manufacturing and service industry indexes have jumped, and the number of unfilled jobs, 5.8 million in April, is at a record since the survey began.
That jobs report, combined with Britain’s vote to leave the European Union, had fanned wider worries that the American economy was in danger of stalling. That could help Hillary Clinton, the Democratic standard-bearer, who has focused more than the Republicans on the steady economic improvements over President Obama’s two terms and the steep decline in the jobless rate from the recession’s peak of 10 percent.
Concerns about the vitality of the recovery — which is in its seventh year — persist, but economists pointed to several encouraging signs, like manufacturing and consumer spending data. While acknowledging the economy “isn’t yet where we want it to be,” Mrs. Clinton has argued that the United States is “stronger and better positioned than anyone in the world.” She has endorsed a higher minimum wage, expanded paid leave, more money for job training and a multibillion-dollar infrastructure plan.
Every monthly jobs report provides only a fleeting and incomplete picture, and a strike by more than 35,000 Verizon workers artificially held down May’s totals; they were back on the job in June and counted once again. Many Americans, though, particularly those with fewer skills and less education, have yet to partake in the recovery’s rewards.
“The slight uptick in unemployment is probably for good reasons, because more people rejoined the labor force,” Andrew Chamberlain, chief economist at Glassdoor Economic Research, said after the report was released on Friday. Real median household income is lower than it was a decade ago. And a broader measure of unemployment that includes discouraged job seekers and those who would prefer to work full time instead of part time ticked down to 9.6 percent in June but is still nearly twice the official rate.
More important, economists said that if the longer-term employment picture were significantly darkening, the stress would show up in other crucial areas. It is not. New claims for unemployment benefits have stayed at rock-bottom levels, consumer spending is strong, the manufacturing and service industry indexes have jumped, and the number of unfilled jobs, 5.8 million in April, is at a record since the survey began. The proportion of people employed or actively looking for work has also been dragging along at low levels, suggesting that more people would return to the work force if desirable jobs were available.
“During an economic downturn, the first place employers look to cut are unfilled jobs,” said Mr. Chamberlain, adding that he had seen little evidence that hiring was being scaled back. “When I look through all the data, there is no smoking gun that the U.S. economy is pulling into a recession now.”
Given that the jobless rate has consistently been at 5 percent or less since last fall, Mr. Chamberlain and other analysts argue it is time to lower the benchmarks for what is labeled a good or bad report.
“There’s no question that job growth is significantly slower today than it was one or two years ago,” he said, when the average monthly number routinely topped 200,000. “But that is to be expected at this point in the economic cycle.”
Taking account of the growing numbers of retiring baby boomers and the population growth, a monthly gain of 75,000 to 100,000 jobs is sufficient to keep the unemployment rate steady, while a 125,000 monthly gain is what is required to nudge it down further, Mr. Maki said before the report was released on Friday.
“I do think that whole framework will have to change over the next couple of years,” said Mr. Maki, who is also skeptical that the economy is in for a sustained slowdown.
But he acknowledged that the economy was in a transitional point, with job growth easing, which propels fears that it could quickly turn negative.
Many Americans, though, particularly those with fewer skills and less education who have yet to partake in the recovery’s rewards, have all the evidence they need that the economy is distressed.
Real median household income is less than it was a decade ago. And a broader measure of unemployment that includes discouraged job seekers and those who would prefer to work full time instead part time, has consistently hovered at around twice the official rate. The proportion of people employed or actively looking for work has also been dragging along at low levels, suggesting that more people would return to the work force if desirable jobs were available.
The deep-rooted discontent with the economy has been repeatedly voiced by the presumptive Republican presidential nominee, Donald J. Trump, who has opposed what he calls “job-killing” trade deals, promising to impose high tariffs as a way of reversing the decline in manufacturing jobs and to deport immigrants.The deep-rooted discontent with the economy has been repeatedly voiced by the presumptive Republican presidential nominee, Donald J. Trump, who has opposed what he calls “job-killing” trade deals, promising to impose high tariffs as a way of reversing the decline in manufacturing jobs and to deport immigrants.
When it comes to presidential elections, the economic trend is more important than any particular number, said Lynn Vavreck, a professor of political science at University of California, Los Angeles. “As long as it’s going in the right direction, that’s a good sign for the incumbent party,” she said. Tom Perez, the labor secretary, conceded there was “still a lot of work to do,” but scoffed at Republicans who have said the economy was at a standstill. “I think they were wrong,” he said.
That is why Hillary Clinton, the Democratic standard-bearer, has focused more on the steady economic improvements over President Obama’s two terms and the steep decline in the jobless rate from the recession’s peak of 10 percent. While acknowledging the economy “isn’t yet where we want it to be,” Mrs. Clinton has argued that the United States is “stronger and better positioned than anyone in the world.” She has endorsed a higher minimum wage, expanded paid leave, more money for job training and a multibillion-dollar infrastructure plan. Andrew Chamberlain, chief economist at Glassdoor Economic Research, said the rise in the jobless rate, which is based on a separate survey of households, “is probably for good reasons, because more people rejoined the labor force.”
Such public spending would certainly bolster public sector employment, which has still not recovered to its pre-recession levels. .
In the private sector, skilled workers are finding themselves in demand, as higher wages are dangled. Given that the jobless rate has consistently been at 5 percent or lower since last fall, Mr. Chamberlain and other analysts argue it is time to lower the benchmarks for what is labeled a good or bad report.
“I travel all over the country and everywhere I go, I sit down with C.E.O.s and ask them what their No. 1 problem is,” said Steve Rick, chief economist at CUNA Mutual Group, which provides insurance and financial services for credit unions nationwide. “They say, ‘Just finding qualified people from a teller to a mortgage home officer.’” “There’s no question that job growth is significantly slower today than it was one or two years ago,” he said, when the average monthly number routinely topped 200,000. “But that is to be expected at this point in the economic cycle.”
Turnover is also rising at these financial institutions, he said, as “people are getting better offers elsewhere.” Taking account of the growing numbers of retiring baby boomers and the population growth, a monthly gain of 75,000 to 100,000 jobs is sufficient to keep the unemployment rate steady, while a 125,000 monthly gain is what is required to nudge it down further, Mr. Maki at Point72 Asset Management said.
David Lukes, chief executive of Equity One, a commercial real estate investment company, said that for the kind of workers he is looking for — administrators, salespeople, accountants, paralegals, construction managers — the labor pool is not that deep. “I do think that whole framework will have to change over the next couple of years,” he added.
In the private sector, skilled workers are in demand and higher wages are dangled.
David Lukes, chief executive of Equity One, a commercial real estate investment company, said that for the kind of workers he was looking for — administrators, salespeople, accountants, paralegals, construction managers — the labor pool is not that deep.
“I’ve had the troubling experience of losing good employees,” Mr. Lukes said, who has increased wages and perks like flexible hours and stock incentives to keep the competition at bay. “Reward programs are much more important than they were three, four and five years ago.”“I’ve had the troubling experience of losing good employees,” Mr. Lukes said, who has increased wages and perks like flexible hours and stock incentives to keep the competition at bay. “Reward programs are much more important than they were three, four and five years ago.”
Ian Siegel, co-founder and chief executive of ZipRecruiter, which aggregates job postings and distributes them to job seekers, said that demand was down from the peaks of 2015, but hiring was still strong in health care and warehousing. Construction workers are also keenly sought in some cities, he said, with postings that promise relocation packages, especially for managers. Ian Siegel, co-founder and chief executive of ZipRecruiter, which aggregates job postings and distributes them to job seekers, said that demand was down from the peaks of 2015, but hiring was still strong in health care and warehousing.
Matthew Ferguson, chief executive of the online job site CareerBuilder, which recently commissioned a survey of hiring managers and workers, said employers indicated they were being pressured to raise wages for skilled and semiskilled workers. Still, he has not seen any outsize bump or drop in hiring. Construction workers are also keenly sought in some cities, he said, with postings that promise relocation packages, especially for managers.
“We’ve just had a slow and steady labor market in the last couple years,” he said, “and I’m guessing that will continue for the next six months.” Steve Rick, chief economist at CUNA Mutual Group, which provides insurance and financial services for credit unions nationwide, said: “I travel all over the country and everywhere I go, I sit down with C.E.O.s and ask them what their No. 1 problem is. They say, ‘Just finding qualified people, from a teller to a mortgage home officer.’”
Turnover is also rising at these financial institutions, Mr. Rick said, as “people are getting better offers elsewhere.”
“There are a lot of positive and encouraging signals out there,” he said.
Matthew Ferguson, chief executive of the online job site CareerBuilder, which recently commissioned a survey of hiring managers and workers, said employers indicated they were being pressured to raise wages for skilled and semiskilled workers.