U.S. employers created 287,000 net new jobs in June, marking a snapback from the miserable May report and exceeding expectations. For the second quarter, monthly employment gains averaged just over 147,000.
The June data were bolstered by the return of approximately 36,000 Verizon workers who had been on strike. The total number of jobs in the information category, which includes telecommunications, reached 44,000 on the strength of the returning Verizon workers. Strong gains of 30,000 were reported in the retail trade sector. Health care & social assistance jobs increased by 58,000. Leisure and hospitality businesses added 59,000 jobs. Employment in that sector reaccelerated as more consumers frequented restaurants and drinking places after a slowdown during the previous three months. Mining employment continued to shrink, losing 6,000 jobs in June; employment in that sector has contracted for 21 months in a row, highlighting the ongoing difficulty faced by oil producers because of lower oil prices. Construction employment was flat for the month as labor shortages persisted. Government added 22,000 jobs, mostly at the local level.
Average hourly earnings moved up two cents compared to May and 2.6% from a year ago; that’s a welcome improvement from earlier this year. Wage acceleration is being driven by new jobs and wage gains in lower wage employment with retail, leisure and hospitality employers.
Separately, in the monthly survey of households, the unemployment rate rose to 4.9% in June as workers rejoined the labor force. The participation rate edged up 0.1% to 62.7%
Bottom Line: Today’s release confirmed our belief that the weak May employment report was an outlier and that the economy is holding up. The stock market moved higher on the better-than-expected numbers, but that doesn’t diminish the longer term concerns emanating from the recent Brexit vote.