Strong hiring in June with 224,000 new jobs and 3.7% unemployment
Hiring rebounded in June after several months marked by slower job growth, easing recession fears in some corners of Wall Street and lowering pressure on the Federal Reserve to cut interest rates this summer to stimulate the economy.
Employers added a robust 224,000 jobs in June and the unemployment rate ticked up slightly to 3.7% from 3.6%, the U.S. Labor Department reported Friday. Most economists had expected about 160,000 jobs to be created.
Wage growth in June was disappointing: Over the past 12 months, wages were up 3.1%, below market estimates of 3.2%, signaling that the economic recovery is still not complete.
"This is an important reminder that there are still workers who have not fully benefited from this recovery," said Martha Gimbel, research director for Indeed Hiring Lab.
"At this point in recovery, we would expect to see faster wage growth," Gimbel explained. "This comes back to the solid job growth numbers which suggest there are still more people for employers to higher before they have to start raising wages to find workers. This economy still has more room to grow."
Cheap labor from abroad, combined with advances in technology, could be to blame for the anemic wage growth of recent years, according to Josh Wright, chief economist at iCIMS. "It's easier to access foreign workers and replace workers here with technology," he said.
A wage growth rate closer to 3.5% would be an indicator of genuine, full employment, said Valerie Wilson of the Economic Policy Institute. "If that were the case, it would be a clearer sign that workers are getting a larger share of corporate income, and we would want that to be consistent over a period of time, not just one month," Wilson said.
May's dismal count of 75,000 jobs added was revised down to 72,000.
The healthy rebound in jobs growth in June could ease pressure on the Federal Reserve to cut interest rates later this month to help stimulate the U.S. economy as global trade growth and business activity appear to slow.
The major U.S. stock indexes were down about 0.5% on the news after trading opened Friday, with some Wall Street investors who had bet that rate cuts this month could help prop up rising stock prices apparently selling on the news of strong job growth.
"Fed officials will have plenty of time with their public appearances in the coming weeks to reset or affirm those rate-cut expectations," said Mark Hamrick, Bankrate.com senior economic analyst. "The array of headwinds associated with slowing global growth, trade disputes and tariffs haven't gone away."
The Fed on Friday repeated its pledge to "act as appropriate" to sustain the current economic expansion, now the longest in U.S. history, while noting that most Fed officials have lowered their expectations for the future course of interest rates.
The Fed's statement on interest rates came in its semi-annual monetary policy report, which said that since May "the tenor of incoming information on economic activity, on balance, has become somewhat more downbeat and uncertainties about the economic outlook have increased."
Federal Reserve Chairman Jerome Powell will testify before Congress on the monetary report next Wednesday and Thursday. He will likely face questions on whether the strong jobs report Friday lessens the chances for a July rate cut.
-- The Associated Press contributed to this report.