U.S. Employers Add 288,000 Jobs in June
July 3, 2014 | U.S. News and World Report
Unemployment rate falls to 6.1 percent and labor participation rate remains at 62.8 percent, government says.
By Katherine Peralta
Employment grew by 288,000 in June, a hopeful sign for economic growth heading into the third quarter. The figure is up from 224,000 in May, which was revised up from its previously reported number of 217,000, the Labor Department reported Thursday. The jobless rate was 6.1 percent, a fall from last month’s 6.3 percent.
This marks the fifth month in a row that payrolls have grown by 200,000 or more. The payroll gain was stronger than the median estimate from economists surveyed by Bloomberg, who called for an increase of 211,000. Improved job market prospects could encourage Americans to open up their wallets during the summer months. A pickup in household spending would bode well for overall growth in the U.S. economy, which shrank last quarter more than economists had anticipated. That dip has largely been attributed to a lengthy period of cold weather.
Economists say that both consumers and businesses need to have confidence the labor market is on solid footing before loosening their collective purse strings. Companies, in particular, have been hoarding cash.
“Consumers obviously are the largest component of growth, so if you want to talk about an impetus for above-trend GDP, meaning above this 2 percent range, it’s going to come from consumers’ ability to spend in the marketplace,” Lindsey Piegza, chief economist at Sterne Agee, told U.S. News before the report. “And that will only come if we begin to see the investment cycle loosen, meaning companies take that tremendous amount of cash that’s sitting on the sideline and they put that to work.”
Employment gains were broad-based, the report said, "led by gains in professional and business services, retail trade, food services and drinking places, and health care."
The labor participation rate, which measures the amount of people employed or actively looking for a job as a percentage of the available working population, was 62.8 percent, equal to May’s 62.8 percent reading, which was the weakest it’s been since 1978. Explanations for the low rate of participation vary from discouragement among the long-term unemployed to waves of retiring Baby Boomers.
The share of long-term unemployed Americans – out of work for at least 27 weeks – in June fell to 3.1 million from 3.4 million in May. This group of jobless workers accounted for 32.8 percent of the total unemployed last month.
Average hourly earnings rose to $24.45 from $24.38 in May, the report showed.
The number of people employed part-time for economic reasons, also known as involuntary part-time workers, was 7.5 million in June, up from the prior month’s 7.3 million. According to the report, these individuals work part-time either because their hours have been cut or because they were unable to find full-time work.
Piegza says focusing on the weak composition of jobs created – such as low-wage, part-time and temporary jobs – is telling about the state of the labor market.
“That really is, I think, the most important factor of the labor reports that we’ve seen of late … the fact that we’re not seeing that high-wage career job development that you would expect in this stage in the recovery,” she says.
Observed hiring trends suggest that job prospects are looking promising for C-suite executives, however, says Smooch Reynolds, executive vice president of global investor relations and communications practice group leader at DHR International, an executive search firm that places candidates in positions across sectors ranging from consumer retail to financial services.
“I always used the analogy of the buyer and the seller. When we’re in a recession, the buyers are the corporations, meaning candidates who are unemployed are the sellers of what they bring to the table,” she says. “When we’re in non-recessionary times, like now, there’s a complete role reversal. One of the trends that I am seeing is that candidates, people looking for jobs, are having multiple offers today versus a few months ago or a year ago, when they were hoping for one offer.”
Other recent data point to improvement in the labor market. Job cuts planned by U.S. employers fell 41 percent in June after rising to their highest level in 15 months, a report from Challenger, Gray & Christmas, Inc. Thursday showed. A separate jobs report from ADP on Wednesday showed that U.S. businesses added a much stronger-than-expected 281,000 jobs in June.