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07-10-2016, 02:59 AM
WASHINGTON: U.S. job growth surged in June as manufacturers and other employers boosted hiring, confirming the eco**my has regained speed after a first-quarter lull, but tepid wages suggested the Federal Reserve will probably **t raise interest rates soon.**nfarm payrolls increased by 287,000 jobs last month, the largest gain since last October, the Labor Department said on Friday. May payrolls were revised sharply down to show them rising 11,000 rather than the previously reported 38,000.
The sign of strength in the eco**my, however, precedes Britain's stunning vote last month to leave the European Union. The so-called Brexit referendum on June 23 roiled financial markets, raising fears that sustained volatility might hit companies' hiring and investment decisions.
"For the Fed, this report is likely to offer some encouragement on the underlying labor market backdrop, though it is unlikely to change the current 'wait and see' policy stance as they assess the fallout from the Brexit vote," said Millan Mulraine, deputy chief eco**mist at TD Securities in New York.
The Fed raised rates in December for the first time in nearly a decade. Financial markets expect ** further increase this year, but eco**mists believe a December hike is possible if the eco**my continues to grow and add jobs at a steady clip.
Last month's payrolls tally beat eco**mists' expectations for an increase of 175,000 jobs. While the unemployment rate rose two-tenths of a percentage point to 4.9 percent, that was because more people entered the labor force, a sign of confidence in the jobs market.
With the jobless rate rising, average hourly earnings increased only two cents or 0.1 percent in June, suggesting some slack still remains in the labor market. That took the year-on-year gain in earnings to 2.6 percent from 2.5 percent in May.
Eco**mists say wage growth of between 3.0 percent and 3.5 percent is needed to lift inflation to the Fed's 2.0 percent target. A top Fed official said this week the central bank would like to see inflation accompanied by wage gains.
"Wage growth remains subdued, which could reflect the fact that there is still slack in the labor market," said Michelle Meyer, a senior eco**mist at Bank of America Merrill Lynch in New York. "Or perhaps it is a function of low inflation expectations and low productivity, which restricts the ability or desire of businesses to raise wages."U.S. stocks rallied on the employment data, with the main indexes rising more than 1 percent. Prices for longer-dated U.S. government debt rose, while the dollar was little changed against a basket of currencies.
The strong rebound in June payrolls added to data on consumer spending and housing in suggesting that eco**mic growth accelerated from the first-quarter's anemic 1.1 percent annualized rate. The Atlanta Fed is currently forecasting the eco**my growing at a 2.4 percent pace in the second quarter.Manufacturing employment increased 14,000 last month after shedding 16,000 jobs in May. Although manufacturing only accounts for 12 percent of the eco**my, it is considered a leading growth indicator.
The retail sector added 29,900 jobs, more than reversing the prior months' weakness. The leisure and hospitality sector gained 59,000 jobs, the most in nearly 1-1/2 years. Temporary-help jobs, a harbinger for future hiring, rebounded 15,200.
Healthcare and social assistance payrolls jumped 58,400. The return of 35,100 Verizon workers, who were excluded from May's payroll count while on a month-long strike, boosted information sector employment last month.
Government added 22,000 jobs, but construction payrolls were unchanged after two months of declines and mining lost a**ther 5,000 positions.Despite job gains in June being the best for the year, forward momentum in the labor market has slowed. Job gains averaged 282,000 per month in the fourth quarter, but employment has increased by an average of only 171,500 jobs per month in the first half of this year.
Eco**mists say the deceleration is **rmal given the relatively advanced age of the eco**my's recovery from the 2007-09 recession, with the labor market **w near full employment.
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The sign of strength in the eco**my, however, precedes Britain's stunning vote last month to leave the European Union. The so-called Brexit referendum on June 23 roiled financial markets, raising fears that sustained volatility might hit companies' hiring and investment decisions.
"For the Fed, this report is likely to offer some encouragement on the underlying labor market backdrop, though it is unlikely to change the current 'wait and see' policy stance as they assess the fallout from the Brexit vote," said Millan Mulraine, deputy chief eco**mist at TD Securities in New York.
The Fed raised rates in December for the first time in nearly a decade. Financial markets expect ** further increase this year, but eco**mists believe a December hike is possible if the eco**my continues to grow and add jobs at a steady clip.
Last month's payrolls tally beat eco**mists' expectations for an increase of 175,000 jobs. While the unemployment rate rose two-tenths of a percentage point to 4.9 percent, that was because more people entered the labor force, a sign of confidence in the jobs market.
With the jobless rate rising, average hourly earnings increased only two cents or 0.1 percent in June, suggesting some slack still remains in the labor market. That took the year-on-year gain in earnings to 2.6 percent from 2.5 percent in May.
Eco**mists say wage growth of between 3.0 percent and 3.5 percent is needed to lift inflation to the Fed's 2.0 percent target. A top Fed official said this week the central bank would like to see inflation accompanied by wage gains.
"Wage growth remains subdued, which could reflect the fact that there is still slack in the labor market," said Michelle Meyer, a senior eco**mist at Bank of America Merrill Lynch in New York. "Or perhaps it is a function of low inflation expectations and low productivity, which restricts the ability or desire of businesses to raise wages."U.S. stocks rallied on the employment data, with the main indexes rising more than 1 percent. Prices for longer-dated U.S. government debt rose, while the dollar was little changed against a basket of currencies.
The strong rebound in June payrolls added to data on consumer spending and housing in suggesting that eco**mic growth accelerated from the first-quarter's anemic 1.1 percent annualized rate. The Atlanta Fed is currently forecasting the eco**my growing at a 2.4 percent pace in the second quarter.Manufacturing employment increased 14,000 last month after shedding 16,000 jobs in May. Although manufacturing only accounts for 12 percent of the eco**my, it is considered a leading growth indicator.
The retail sector added 29,900 jobs, more than reversing the prior months' weakness. The leisure and hospitality sector gained 59,000 jobs, the most in nearly 1-1/2 years. Temporary-help jobs, a harbinger for future hiring, rebounded 15,200.
Healthcare and social assistance payrolls jumped 58,400. The return of 35,100 Verizon workers, who were excluded from May's payroll count while on a month-long strike, boosted information sector employment last month.
Government added 22,000 jobs, but construction payrolls were unchanged after two months of declines and mining lost a**ther 5,000 positions.Despite job gains in June being the best for the year, forward momentum in the labor market has slowed. Job gains averaged 282,000 per month in the fourth quarter, but employment has increased by an average of only 171,500 jobs per month in the first half of this year.
Eco**mists say the deceleration is **rmal given the relatively advanced age of the eco**my's recovery from the 2007-09 recession, with the labor market **w near full employment.
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