Economy adds 288,000 jobs in June, surpassing expectations
Five years after the recession, the job market is finally hitting stride as small businesses add workers and local governments restore battered payrolls.
U.S. employers added a robust 288,000 jobs in June across a broad spectrum of businesses, the Labor Department said Thursday. The growth flew past analysts’ forecasts and marked the fifth straight month of payroll gains in excess of 200,000 — a hiring spree not seen since the 1990s tech boom.
The unemployment rate, which has fallen surprisingly fast lately, dropped to 6.1% in June from 6.3% in May. Both the jobless rate and the number of officially unemployed, totaling 9.5 million last month, are the lowest in nearly six years. As recently as November, the nation’s unemployment figure was 7%.
Falling unemployment, analysts say, could open the door to rising wages — the final and long-delayed piece of the recovery. Wages rose in June slightly faster than inflation, but that pace could accelerate because of a narrowing gap between job openings and available workers.
“We’re now at a point where the job market is getting tight enough where we will get wage growth,” said Mark Zandi, chief economist at Moody’s Analytics. “More people will feel better.”
Mission Viejo resident Chris O’Connor certainly does. After three years of doing part-time contract consulting gigs for companies that couldn’t afford him, the 52-year-old nailed a six-figure position last month as the chief operating officer of Mark Beamish Waterproofing Inc., a construction industry firm in Anaheim.
“The market is just starting to heat up a little bit,” O’Connor said. “People are more willing to invest.”
President Obama, who has rarely touted the monthly job numbers in his second term, hailed the report Thursday as a sign of the “enormous strides” made since the recession.
“We’ve seen the quickest drop in unemployment in 30 years,” he said during a visit to a tech start-up in Washington, D.C., where he also took the occasion to press Congress to promote growth by taking action on the minimum wage, immigration overhaul and the Highway Trust Fund.
Many economists had forecast that economic and job growth would shift to higher gear this year, with households positioned to spend more, businesses stretched thin on staffing, and the drag from government cutbacks and political gamesmanship having largely faded. But a sharp slowdown in the first three months of the year raised doubts.
Thursday’s jobs report provided strong evidence that the contraction in the first quarter was more a quirk of severe winter weather than a sign of fundamental economic weakness.
With growth rebounding, the June employment data are certain to raise expectations that the Federal Reserve will start to lift its benchmark short-term interest rate earlier than Wall Street had expected.
Accelerated hiring also will likely push up long-term yields and mortgage rates, which have remained unusually low despite an improving growth outlook and the Fed’s gradual pullback of its bond-buying stimulus. The 10-year bond yield went up slightly on Thursday’s jobs report.
Stocks also rose, with the Dow Jones Industrial Average topping 17,000 for the first time, as investors focused on what the pick-up in hiring says about the increasing momentum of the recovery. Eventually, however, higher interest rates could dampen the housing recovery and push some stocks down.
The quick fall in the jobless rate hasn’t been entirely for the right reasons. During the recovery many discouraged workers have dropped out of the job market, meaning they are no longer counted as unemployed. Also, the ranks of workers who have been without work for more than six months — the so-called long-term unemployed — remain at historically high levels, standing at more than 3 million in June.
Still, such indicators of labor hardship have been improving gradually. And on the whole, Thursday’s report was encouraging — and long-awaited.
Local governments are helping to drive the job growth as they reverse sometimes drastic cuts made as tax revenues plummeted during the recession.
After shedding more than a half-million positions — many of them teachers — once-strapped schools and other agencies have stepped up their hiring this year.
City and county governments nationwide added 22,000 to their payrolls in June, the fifth consecutive month of net increases. State and federal governments added a modest 4,000 in June.
Another key factor is the surging confidence of small businesses, which were hit hard by the Great Recession and housing meltdown.
Although many mom-and-pop businesses are still struggling, surveys from the National Federation of Independent Business and other groups indicate that small employers generally are seeing better sales and taking on more workers.
Bruce Hottle, president of Eagle Concrete Products in Somerset, Pa., added three laborers in the second quarter and plans to hire another two or three next month. If he does, his employment will return to where it was before the recession, about 25 workers.
“We’re seeing more private money moving back into construction,” he said.
Small firms dominate the construction industry, as well as the retail and restaurant industries, which have been among the job-growth leaders this year. The gains have come across the range of skills and pay scale.
Lisa Michele Chretien, president and chief executive of Irvine transportation logistics company EventMover Inc., said she recently hired an executive assistant and is now looking to fill up to five project manager positions paying more than $50,000 each.
“Corporate America is getting back into marketing and putting their products and services back out there, pushing hard for growth,” she said. “We’ve all gone through a recession that was really painful, but things are coming back.”
Lee reported from Washington and Hsu reported from Los Angeles.
