Other labor market indicators appeared to augur at least a solid report for June.
In fact, the proportion of Americans working or looking for work slipped to a 38-year low. In addition, 60,000 fewer jobs were created in April and May than previously reported.
“The labor market is good, there’s just not any wage pressure”, said Joseph LaVorgna, chief USA economist at Deutsche Bank Securities Inc.in New York, who correctly projected the drop in unemployment. More people had begun looking for work in May, yet all those gains were reversed in June.
Also, wage growth slowed after showing signs of a pickup the previous month.
The sluggish wage growth suggests that many employers see no need to raise pay to attract or retain workers and that there are more people available for hire than the unemployment rate would indicate. That means the survey week last month ended on Saturday, June 13.
” “This report illustrates both the progress we have made and the challenges that lie ahead”, Labor Secretary Thomas Perez said in an interview”. “There’s still significant slack”.
The number of jobs created was important to the USA economy, but as mentioned by FOX Business most investors, analysts and economists have been focusing on the wage growth. ‘As such, we still think the Fed will hike interest rates in September.’.
Average hourly earnings were unchanged as mining and manufacturing wages fell. The Fed has held its target rate in a range of zero to 0.25 per cent since December 2008, and the last time it raised rates was June 2006.
A Fed increase would lead to higher rates for mortgages, auto loans and other borrowing.
The jobs report said construction companies failed to add any jobs in June after hiring 15,000 in May and 30,000 in April. Manufacturing gained just 4,000 positions. Even though employers added a robust 280,000 jobs in May, they weren’t enough to fully absorb the influx of job seekers. April’s gain was cut to 187,000 from 221,000.
What’s more, white-collar workers in fields like finance, insurance, software and marketing have been in high demand lately, a turnaround from the early days of the recovery when many new jobs tended to be in low-wage sectors like retailing and restaurants.
“More people are traveling, because more people have disposable income”, Cimerola said. “We continue to look for the first rate hike in September”.
The employment report, issued a day early because of the July 4 holiday, gave a small lift to US stock market futures. The economy contracted at a 0.2 percent rate in the January-March quarter. Americans are also experiencing shorter spells of unemployment. The Conference Board said this week that consumer confidence reached the second-highest level since the recession.
That said, half of the primary dealers in the latest survey said their conviction in that call had decreased recently, with Thursday’s disappointing reading of the US job market and a touch-and-go referendum in Greece set for this weekend featuring prominently in their thinking. The dollar was slightly higher against the euro at $1.1085, while USA bond yields fell, The 10-year Treasury yield dropping to 2.39 percent from 2.45 percent. The National Automobile Dealers Association forecasts that sales will top 17 million this year for the first time since 2001. While that is still high by historical standards it’s down from 21-percent a year ago.