Job market gains steam; unemployment rate drops to 6.1%
A robust employment report for June underscored growing confidence about the strength of the recovery but raised concern that the labor market might sway the Federal Reserve to raise interest rates sooner than anticipated.
In June, employers added 288,000 jobs, and the unemployment rate, which is derived from a separate survey of households, declined by 0.2 percentage points to 6.1 percent, its lowest since September 2008, the Department of Labor said on Thursday.
It was the fifth-consecutive month that job growth has topped 200,000 — the best stretch since the technology boom of the late 1990s — and gains were widespread, led by professional and business services, retail, restaurants and health care.
“It looks very good, broad-based job growth,” said Gus Faucher, a PNC Bank economist. “There's really not a lot of negative to take from this one.”
Confidence has been on the rise as many signs point to the slow first quarter as the product of a tough winter, not a crumbling recovery. The number of people who stopped looking for work out of frustration fell 21,000 from the previous month and 351,000 from a year ago, the Labor Department said. The University of Michigan's index of consumer sentiment increased to 82.5 from 81.9 in May.
The long-term unemployed, people jobless for more than 27 weeks, declined by 293,000 to 3.1 million. Companies seem willing to reach further for workers who have been unemployed and are hiring more people without a college education.
The jobless rate among high school grads 25 and older declined significantly, from 6.5 percent in May to 5.8 percent. That suggests an openness to hiring lower-skilled workers and offering job training.
“It indicates that the economy is getting strong enough that it's pulling more people in,” said George Mokrzan, director of economics at Huntington National Bank in Columbus.
The proportion of working-age adults who hold a job or are looking for one, known as labor force participation, remained unchanged at 62.8 percent, leveling off after years of decline.
Labor participation needs to climb higher to get back to a healthy market, economists said. But the leveling off was still a good sign.
The Fed is expected to keep tapering its monthly bond purchases and to hold its short-term interest rate near historic lows through at least mid-2015.
Fed Chair Janet Yellen has said policymakers are in no rush to raise interest rates, though the central bank has said it could increase rates once joblessness hit 6.5 percent.
The Fed kept its course last month when the May report showed a gain of 217,000 jobs — revised to 224,000 on Thursday.
That could change with another few months of strong jobs reports, Mokrzan said. He didn't perceive raising the target Fed funds rate as a bad thing, though, as long as it didn't exceed a quarter of a percentage point increase.
Other economists doubted the Fed would alter course.
The Fed Board has shifted to a more complex reading of labor market health beyond the unemployment rate, looking at the long-term unemployed and wage growth, among a dozen or so measures, said Richard Hoey, Bank of New York Mellon chief economist.
Hourly wages rose just 2 percent in the past year.
The job market is expanding, but so has the population of working-age adults. Many of the added jobs just maintain employment levels, said Heidi Shierholz, an economist at the Economic Policy Institute.
“We're in such a big hole, even if we maintain that (288,000 job growth) pace every single month from here on out, it would take 2 1⁄2 years to get back to pre-Recession labor market conditions,” she said.
Chris Fleisher is a staff writer for Trib Total Media.