US employers added 224,000 jobs to payrolls in June, according to the latest Bureau of Labor Statistics report, comfortably beating expectations of 160,000 and adding more jobs that the US economy has in any month this year.
Revisions to previous reports cut April’s jobs number by 8,000 to 216,00, and downgraded May’s figure from the previously announced gains of 75,000 to 72,000. Over the past three months, the US has economy added 171,000 jobs, on average, down from 223,000 per month last year.
The June report showed a steady wage growth of 3.1 per cent year-over-year, a pace that has barely budged in months, and done little to push up prices.
A strong labour market pulled more Americans from the sidelines and into the workforce. An increase in the labour force participation rate – or the proportion of working-age Americans who have a job or are looking for one – from 62.8 per cent in May to 62.9 per cent, contributed to a higher unemployment rate of 3.7 per cent, up from a half-century low of 3.6 per cent in the previous month. Job openings now outpace the number of registered unemployed people.
The average workweek was unchanged at 34.4 hours.
The yield on the benchmark 10-year government bond, which moves in the opposite direction to price, jumped 8.6 basis points to 2.04 per cent on Friday (late last month the yield fell under 2 per cent for the first time since 2016 amid worries about an economic slowdown). The 2-year yield, which is more sensitive to monetary policy, rose 8.7 basis points to 1.86 per cent as expectations of 50bp interest rate cut at the Federal Reserve’s next meeting later this month were dealt a blow, despite pressure from President Donald Trump for rates to be cut aggressively as the 2020 presidential campaign begins (Mr Trump is widely expected to make the economy’s strength a centrepiece of his re-election campaign). Economists have trimmed bets on rate reductions though still think a 25-basis-point cut in July is likely.
The US economy expanded at an annualised rate of 3.2 per cent in the first quarter of 2019 and is still growing by about 1.3 per cent, according to the “nowcasting” model of the Atlanta Fed. The strength of the US economy, which is in its longest expansion on record, stands in stark contrast to weakness overseas.
The Dow Jones Industrial Average, the S&P 500, and the tech-focused Nasdaq Composite were all lower on Friday. US equities, however, were up for the week amid optimism over a potential trade deal between the US and China. The dollar index, which tracks the US currency against a basket of peers, was up 0.5 per cent.
