The employment part of the economy continued to power forward in June, adding another 213,000 jobs though the unemployment rate rose to 4 percent, according to a government report Friday.
Economists surveyed by Reuters had expected a nonfarm payrolls gain of 195,000 and the jobless rate to hold steady at 3.8 percent, which had been tied for the lowest since 1969.
Another solid month of job gains provided little help to wages. In addition to the payroll gains, average hourly earnings rose 2.7 percent year over year, a bit below expectations of a 2.8 percent increase.
Despite increasing talk about the economy being near full employment, hiring continues to grow. Along with June’s upside surprise, the Bureau of Labor Statistics revised April’s count up from 159,000 to 175,000 and May’s from 223,000 to 244,000, a total of 37,000 more than initially stated.
After the report, the Dow opened lower, while the S&P 500 was flat,
The increase in the unemployment rate came due to a rise in the labor force participation rate, which increased 0.2 percentage points to 62.9 percent as 601,000 people came off the sidelines and re-entered the labor force. A more encompassing measure of unemployment that includes discouraged workers and those at part-time jobs for economic reasons also rose two-tenths, to 7.8 percent.
Along with the rise in overall unemployment, the rate for blacks, which had been at a record low 5.9 percent, jumped to 6.5 percent.
Professional and business services led the way with 50,000 new jobs while manufacturing added 36,000. Health care was up 25,000 and construction gained 13,000. Retail lost 22,000 jobs.
The employment-to-population ratio held steady at 60.4 percent, tied for the highest level since January 2009.
“The employment report this month demonstrates yet again the robust strength of the labor market,” said Steve Rick, chief economist at CUNA Mutual Group. “After a red-hot May, June kept up steady momentum in jobs and certainly hit back at any worries among economists who thought hiring was beginning to plateau after an inconsistent past few months.”
The report comes amid hopes that the economy is beginning to shift into high gear. GDP rose just 2 percent in the first quarter but is widely projected to increase close to 4 percent for the second quarter. CNBC’s Rapid Update tracker of economist expectations is putting the expected gain at 3.8 percent.
Federal Reserve policymakers are watching the numbers closely.
The central bank already has increased its benchmark interest rate twice this year and has indicated two more hikes before the end of 2018.
However, minutes released Thursday from the June Federal Open Market Committee meeting indicate some concern about the jobs market.
While the meeting summary indicated a belief that the labor outlook “had continued to strengthen,” there also was concern that businesses are having a hard time filling jobs. While some of the Fed’s contacts indicated they are raising pay, the overall feeling was that wage pressures remain subdued, which was confirmed by Friday’s report.
One factor holding back wage increases was that the job growth titled away from full-time positions, which actually declined by 89,000, according to the BLS’ household survey data.