Hiring robust, jobless rate drops to 6.1%

June job gain put at 288,000

In this Thursday, June 12, 2014 photo, people wait in line for the Cleveland Career Fair in Independence, Ohio. The Labor Department releases employment data for June on Thursday, July 3, 2014.
In this Thursday, June 12, 2014 photo, people wait in line for the Cleveland Career Fair in Independence, Ohio. The Labor Department releases employment data for June on Thursday, July 3, 2014.

WASHINGTON -- U.S. employers accelerated their hiring in June, adding a robust 288,000 jobs and helping drive the unemployment rate down to 6.1 percent, the Labor Department reported Thursday.

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The Dow Jones industrial average climbed above 17,000 for the first time Thursday after the jobs report was released. The Dow rose 92.02 points, or 0.5 percent, to 17,068.26. It took the Dow 227 days to cross the 17,000 mark after surpassing 16,000 for the first time on Nov. 18.

It was the fifth-straight monthly job gain above 200,000 -- the best such stretch since the late 1990s tech boom. In the past 12 months, the economy has added nearly 2.5 million jobs -- an average of 208,000 a month, the fastest year-over-year pace since 2006.

Arkansas' unemployment rate was 6.4 percent in May, down from 6.6 percent in April.

Nationally, wages have yet to show a significant rise despite an economic recovery now entering its sixth year. Eventually, analysts say, the falling unemployment rate should cause pay to rise more sharply.

"We're seeing a self-sustaining recovery where production growth leads to job growth, which leads to consumption growth," said Robert Stein, deputy chief economist at First Trust Portfolios LP in Wheaton, Ill.

"This is a pretty strong report," said Jim Paulsen, chief investment strategist at San Francisco-based Wells Capital Management.

The uptick in payrolls is a rare bit of good news for the White House, which has faced an uphill fight to portray the economy as robust when it shrank by nearly 3 percent in the first quarter. Administration officials pointed to the new data as evidence their policies are working.

"This is one of the strongest reports we've seen since the end of the recession," said Thomas Perez, the secretary of labor. "There was good job creation in high-wage, mid-wage and low-wage positions. It was broad-based."

"Obviously, there's unfinished business," he added, citing the still-elevated level for long-term unemployment.

June's healthy U.S. job growth followed additions of 217,000 jobs in May and 304,000 in April, figures that were both revised upward. Monthly job gains so far this year have averaged 230,833, up from 194,250 in 2013.

The unemployment rate dipped in June from 6.3 percent in May to its lowest level since the financial crisis struck at full force in the fall of 2008 with the bankruptcy of the Wall Street firm Lehman Brothers.

"Since February, this has now become a textbook jobs expansion," said Patrick O'Keefe, director of economic research at the consultancy CohnReznick. "It is both broad and accelerating."

Economists say the steady U.S. job gains should help fuel more purchases of goods from Asia and Europe and strengthen their economies at least slightly. Much of Europe is suffering from high unemployment. And China is trying to moderate its economy's growth without slowing it too much.

"If we have some momentum going into the second half of the year, it helps the world economy because we're big consumers," said Stuart Hoffman, chief economist at PNC Financial Services.

The U.S. job gains in June were widespread. Factories added 16,000 workers, retailers 40,200. Financial and insurance firms increased their payrolls by 17,000. Restaurants and bars employed 32,800 more people. Only construction, which gained a scant 6,000, appeared to reflect the slow recovery of previous years.

Job growth has averaged 272,000 over the past three months. In May, the economy surpassed its jobs total from December 2007, when the recession officially began.

The challenge is whether the job gains will pull more Americans back into the workforce. Many people who lost jobs during the recession and were never rehired have stopped looking for work. Just 62.8 percent of adult Americans are working or are looking for a job, compared with 66 percent before the recession.

The number of long-term unemployed has dropped 1.2 million over the past year to just under 3.1 million. That's half what it was three years ago. But the government data suggest that many long-term unemployed have given up their job searches -- a trend that could create a drag on future U.S. growth.

The steady hiring means businesses are increasingly competing to find workers.

"It's becoming more difficult to find the candidates that we're looking for," said Brandon Calvo, chief operating officer at Cosentino North America, a Houston-based firm that sells quartz, granite and other materials for kitchen counters and bathrooms.

At the same time, that trend has yet to fuel higher incomes across the economy. Average pay has grown just 2 percent a year during the recovery, roughly in line with inflation and below the long-run average annual growth of about 3.5 percent.

The lack of strong wage growth means the Federal Reserve may not feel pressure to start raising short-term interest rates soon as a way of controlling inflation.

"We are still not seeing any significant pickup in wage growth," Paul Ashworth, chief U.S. economist at Capital Economics, wrote in a research note. "We suspect that Fed officials will continue to cling to the view that there is still plenty of slack in the labor market."

The economy's contraction in the first three months of this year -- at an annual rate of 2.9 percent -- was the sharpest since the recession. Winter storms and freezing weather caused factories to close and prevented consumers from visiting shopping malls and auto dealers.

Still, the winter failed to freeze hiring and job growth has continued with little to no interruption. This should help to speed growth because more jobs mean more paychecks for people to spend.

Most economists say annualized growth likely reached a solid 3 percent to 3.5 percent in the April-June quarter. Growth over the entire year should be about 2 percent, they say, similar to last year's 1.9 percent expansion.

Many signs point to the economy's brightening health.

Auto sales rose at the fastest pace in eight years in June. Factory orders picked up last month. And home sales strengthened this spring after having sputtered in the middle of last year when higher mortgage rates and rising prices hurt affordability.

Information for this article was contributed by Josh Boak and Paul Wiseman of The Associated Press; by Shobhana Chandra and Lu Wang of Bloomberg News; and by Nelson D. Schwartz of The New York Times.

A Section on 07/04/2014

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