U.S. job creation accelerated in June but wages remained static defraying a portion of the economic benefits from rising employment.
Non-farm payrolls added 222,000 positions last month and revisions to April and May found 47,000 more jobs, according to the Labor Department on Friday. The standard unemployment or U-3 rate rose 0.1 percent to 4.4 percent. The median forecast in the Reuter’s survey of economists was for 179,000 new employees and an unchanged unemployment rate of 4.3 percent.
New Payrolls have averaged 180,000 per month this year, down slightly from 2016's 187,000.
Wage growth remained quiescent as it has for most of the recovery barely beating inflation. Average hourly earnings climbed 0.2 percent on the month, missing the 0.3 percent prediction and May’s gain was halved by revision to 0.1 percent. Earnings rose 2.5 percent on an annualized basis. The average work week added 0.1 to 34.5 hours.
Annual consumer inflation was 1.9 percent in May, leaving just 0.6 percent a year in increased purchasing power for the average household. Even the Federal Reserves preferred gauge of inflation, the personal consumption expenditure price index, which excludes food and energy costs something consumers cannot do, and historically has a lower rate of inflation, was running at a 1.4 percent in May, leaving consumers with just 1.1 percent a year in real wage gains.
Health care saw the largest number of new positions at 37,000, with professional and business services adding 35,000. Finance related jobs grew by 17,000 and mining which includes oil and natural gas drilling added 8,000 new positions. Factory work added 1,000 jobs, retail rose by 8,100 and leisure and hospitality jobs jumped by 11,000.
Private employment climbed by 187,000, besting the estimate of 170,000 following a 159,000 increase in May. Government payrolls added 35,000, the most in a year, largely driven by state and local jurisdiction hiring.
The so-called underemployment or u-6 rate climbed to 8.6 percent from 8.4 percent. This measure counts as unemployed people who are working part time but want full-time work and those who have looked for work any time the prior year. The more commonly quoted U-3 rate lists part time workers as employed and limits unemployed workers to a one month prior search. Workers who have not looked for work in the previous month are counted as discouraged and not included in the labor force.
The labor force participation r ate edged up to 62.8 percent in June from 62.7 in May. It remains close to its 40 year low of 62.4 percent reached in September 2015.
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