Job growth eases, still passes 200,000
Jobless rate edges up to 6.2% in July
Posted: August 2, 2014 at 4:11 a.m.
WASHINGTON -- U.S. employers added more than 200,000 jobs in July for a sixth-straight month, the Labor Department said Friday.
Improving economic conditions drew more job seekers into the labor force, pushing up the unemployment rate to 6.2 percent from 6.1 percent in June.
July's gain of 209,000 jobs was less than in the previous three months, and most of the new job seekers didn't find work. But the increase suggests that they're more optimistic about their prospects, economists said. The jobless aren't counted as unemployed unless they're actively seeking work.
Average job gains over the past six months reached 244,000 in July, the best such monthly average in eight years.
"Job growth slowed in July after heated gains in the past three months," Sal Guatieri, senior economist at BMO Capital Markets, said in a research note. "But hiring trends remain solid, reflecting a strengthening economy."
While the labor market has improved, Federal Reserve policymakers this week said that they will keep interest rates low until wages accelerate and more discouraged workers find jobs.
"You now have six straight months of greater-than-200,000 job gains," said Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC in New York. "The labor force rose, and the labor force rises typically when people are feeling better about the backdrop."
The proportion of working-age adults who either have a job or are looking for one rose slightly in July from a 35-year low to 62.9 percent. It was the first increase in four months.
Investors were unimpressed by Friday's data. The Dow Jones industrial average fell 69.93 points, and broader indexes also fell. The yield on the 10-year Treasury note dipped, suggesting less concern about a Fed rate increase.
The pickup in hiring has yet to translate into larger paychecks for most Americans, a factor that has hobbled the recovery. In July, average hourly earnings ticked up just a penny to $24.45. That's just 2 percent higher than it was 12 months earlier and is slightly below current inflation of 2.1 percent. In a healthy economy, wages before inflation would rise 3.5 percent to 4 percent annually.
"People's standards of living are still stuck in the mud," said Mark Zandi, chief economist at Moody's Economics, who called the government's report otherwise "close to perfect," because job growth increased across nearly all industries and all pay scales.
Pay has failed to accelerate, in part, because many Americans are still uncertain about the economy's long-term health, said Mike Schenk, a senior economist at the Credit Union National Association.
Schenk expects wages to pick up once the unemployment rate falls to around 5.5 percent -- a level at which some businesses will have to increase pay to keep workers, and some employees will be more confident asking for a raise.
"People are still bruised," Schenk said. "I don't think they feel comfortable, generally speaking, walking in and asking for raises at this point."
Still, Friday's report echoes other data that point to an improving economy. Growth accelerated during the April-June quarter, the government said Wednesday, after contracting sharply in the first three months of the year. Last quarter's rebound assuaged fears that growth was too weak to support this year's rapid hiring.
In addition to reporting July's solid job gain, the government on Friday revised up its estimate of job growth in May and June by a combined 15,000.
Higher-paying jobs showed broad increases in July. Manufacturing added 28,000 jobs, the most in eight months. Construction added 22,000 and financial services 7,000, its fourth-straight gain.
"This is another solid report that shows we are sustaining the momentum of broad-based growth in the economy," said Thomas Perez, the labor secretary. He also cited the growth in well-paying professional and business services jobs as evidence that gains were spreading more widely.
In the April-June quarter, the economy expanded at a seasonally adjusted 4 percent annual rate after a steep 2.1 percent contraction in the first quarter that has been attributed to a brutal winter. Last quarter, Americans stepped up their spending, particularly on autos, furniture and other big-ticket items. Businesses also spent more on production plants, office buildings and equipment.
Americans are also gradually gaining confidence in the economy, which means spending could accelerate in coming months. The Conference Board's consumer confidence index jumped to its highest level in nearly seven years in July.
Information for this article was contributed by Christopher S. Rugaber and Paul Wiseman of The Associated Press; by Jeanna Smialek, Michelle Jamrisko and Chris Middleton of Bloomberg News; and by Dionne Searcey of The New York Times.
A Section on 08/02/2014