Washington: Employers shook off two months of weak hiring by adding 287,000 jobs in June, a robust pace that suggests a resilient US economy recovering from a slump early in the year. The hiring spurt marked a sharp improvement from May’s dismal showing, when just 11,000 jobs were added. A modest 144,000 jobs had been added in April.
The unemployment rate rose in June to 4.9% from 4.7% as more Americans began seeking jobs— a sign of growing confidence—and some didn’t find them. The broadly positive report suggests that the US economy was improving before the United Kingdom startled the world late last month by voting to leave the European Union.
The recent hiring slump had come after the economy grew at a tepid 1.1% annual rate in the first three months of the year. Americans’ spending rose at the slowest pace in two years during that time—a significant drag given that consumer spending drives around 70% of the economy.
Concerns about the global economy have deepened since the UK’s “Brexit vote,” which sent financial markets gyrating. The yield on the 10-year US Treasury note this week touched a record low of 1.34%. Such a decline has historically signalled anemic growth and even an outright recession. When investors fear for the future and seek safe returns for their money, they typically shift into Treasury. That flow of money forces down yields.
The hiring slowdown caught Federal Reserve officials off guard. They cited the weak jobs figures during their June meeting as a key reason for putting off any further rate increases.
That sentiment signalled a shift from their April meeting, when many Fed policymakers had indicated that they were prepared to raise rates as soon as June if the job market and the economy continued to improve.
Most recent economic data had pointed to an improvement from the sluggish start to the year, though all of it pre-dated the Brexit vote. Americans, for example, ramped up their spending in April and May, and measures of consumer confidence also grew. The stronger spending led economists to forecast that annualized growth rebounded to 2% or more in the April-June quarter.
Manufacturing companies expanded in June at their fastest pace since November, according to a survey by the Institute for Supply Management, a trade group. Services companies, including retailers and banks, also grew at a faster pace in June, the ISM found.
And home sales have marched upward this year despite a low supply of houses for sale. Sales of existing homes reached a nine-year high in May.