Wage growth rebounded strongly in June as the US economy added 224,000 jobs as both the employment picture and the overall growth picture weakened. According to the Ministry of Labor, the unemployment rate rose to 3.7%.
Economists interviewed by Dow Jones had expected the number of non-agricultural workers to increase by 165,000 and the unemployment rate to remain constant at 3.6%. The growth of 75,000 originally announced in May had cast doubt on the consistency of the record expansion begun a decade ago. The May count has been lowered to 72,000.
Professional and business services led to growth of 51
The closely watched average hourly pay disappointed and rose 0.2%. on a monthly basis against expectations for growth of 0.3%. In the last 12 months, wages increased by 3.1%, slightly below the market estimates of 3.2%.
With the unemployment rate rising, the number of discouraged and underemployed workers rose to 7.2%.
Overall, employees were able to dispel fears of a weakening of the labor market. A release of ADP and Moody's Analytics earlier this week saw private payroll growth of just 102,000, well below the 191,000 government figure. 33,000 employment gains by the government accounted for the balance of the increase in June.
Federal Reserve leaders have closely monitored employment figures. Markets have largely expected the central bank to cut interest rates later this month, regardless of what the June salary report showed.
However, some Fed officials insist that they can continue to monitor economic data before acting. Manufacturing activity has recently shown signs of decline as executives complain about price increases due to tariffs imposed by the US on their trading partners.
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A US Federal Reserve economist in St. Louis recently wrote a report stating that real estate development is having a recession and the bond market has been showing signs of slowing for months. However, the stock market was encouraged by the results of the G20 negotiations last week, when the US and China did not pledge any additional tariffs. Futures indicated a slightly lower start to the day before the job report.
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