The US economy again added more jobs than expected in June even as the unemployment rate rose, the Labor Department reported on Friday.
The NFP reading rose by 206,000 for the month, higher than the Dow Jones forecast of 200,000 although less than the revised increase of 218,000 in May, which was sharply reduced from the initial estimate of 272,000.
The unemployment rate rose unexpectedly to 4.1%, bound for the highest level since October 2021 and providing a bullish sign for Federal Reserve officials weighing the next step in their monetary policy. The forecast is for the unemployment rate to remain stable at 4%.
The increase in the unemployment rate came as the labor force participation rate, which shows the level of people of working age who are working or actively looking for work, rose to 62.6%, up 0.1 percentage points.
The broader unemployment rate that counts workers who don't want to work and those who hold part-time jobs for economic reasons remained steady at 7.4%. Household employment, which is used to calculate the unemployment rate, rose by 116,000.
Although job creation in June exceeded expectations, it was largely due to a 70,000 jump in government employment. In addition, the health sector, which was consistently the leader by sector, added 49,000 jobs while social assistance contributed 34,000 and construction increased by 27,000.
On wages, average hourly earnings rose 0.3% for the month and 3.9% from a year ago, both in line with estimates. The average working week remained stable at 34.3 hours.
Aside from the significant revision in May's payroll count, the Bureau of Labor Statistics lowered the April reading to just 108,000, a drop of 57,000 from the previous estimate.
The report comes as Federal Reserve officials consider the next step in their monetary policy.
At their latest meeting, policymakers indicated they needed to see more progress on inflation before lowering interest rates, noting that a strong economy and particularly a labor market that remained strong reduced the need to act in the near term, according to minutes released earlier this week. .
Despite indications to the contrary, markets are pricing in two rate cuts, assuming a quarter-percentage-point cut, before the end of 2024. Fed policymakers at the June meeting ruled out just one cut, saying they needed to see "additional favorable data" before moving forward. with reduction.
