US economy looks strong with 287,000 jobs added in June
Justin Sullivan (Getty/AFP)
US employers added new workers at a surprisingly strong rate in June after an unnerving stall in May, in a clear demonstration of economic resilience, the Labor Department reported Friday.
The much better-than-expected numbers gave a boost to markets in the US and Europe, which have been battered down by worries that Britain's vote to withdraw from the European Union will drag down economic growth.
Private businesses and government authorities across the United States generated 287,000 new positions last month, 112,000 more than analysts had expected.
The strongest hiring was in the health care, hospitality,
That largely compensated for the poor numbers from May that had shocked policymakers and markets, sending the dollar lower and contributing to the Federal Reserve's decision last month to put off an interest rate hike.
The May job creation
June's hiring levels boosted the monthly average of the last three months to a solid 147,000, which economists say is adequate to keep bringing down unemployment overall.
"This is a good
Markets reacted positively, with the S&P 500 surging 1.5 percent to a fraction shy of an all-time record.
In Europe, Frankfurt's DAX index gained 2.2 percent Paris's CAC 40 added 1.8 percent, while in London the FTSE 100 barometer rose 0.9 percent.
As analysts said the data increases the chances that the Federal Reserve will raise interest rates at least once before the end of the year, early in the session the dollar jumped and US bond yields, which had plunged in recent weeks, spiked higher.
But by the end of the day the dollar had retrenched to $1.1050 per euro, only slightly up from Thursday. And the yield on the 10-year Treasury bond fell to a new all-time low of 1.366 percent.
The jobs numbers were not unequivocally good. Wage growth, another indicator of economic strength, slowed slightly, bringing the annual pace
And the unemployment rate, which is based on a separate database from the job creation numbers, rose by 0.2 percentage points to 4.9 percent, though still near the lowest level in more than eight years.
That rise was mainly due to a large jump in the number of people reported rejoining the workforce, diluting the impact of the hiring surge
In May the unemployment rate had fallen from 5.0 percent to 4.7 percent after the volatile data showed a huge number of people had dropped out of the labor force.
Analysts remained cautious over what the hiring surge means for the economy going ahead, saying US businesses could remain cautious in the coming months, concerned Britain's vote to withdraw from the European Union, which is expected to hit economic growth in Britain and Europe.
"We believe the trend remains more than strong enough to keep the unemployment rate declining over time, consistent with additional upward pressure on wage gains," said Jim O'Sullivan, chief US economist at High Frequency Economics.
But O'Sullivan expects the Federal Reserve will continue to keep US interest rates on hold at its end-July meeting.
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