Unemployment rate in US near six-year low

July 04, 2014 - 7:32:33 am

WASHINGTON: US employment growth jumped in June and the jobless rate closed in on a six-year low, decisive evidence the economy was growing briskly heading into the second half of the year.

Nonfarm payrolls increased by 288,000 jobs last month and the unemployment rate fell to 6.1 percent from 6.3 percent in May, the Labour Department said yesterday. Data for April and May were revised to show a total of 29,000 more jobs created than previously reported. In addition, the ranks of the long-term unemployed shrank and the share of Americans with a job hit its highest level since August 2009. Job gains were widespread across sectors and there were few signs of inflationary wage pressures.

“It’s a strong report, there is no question about it. The labour market is improving at a seemingly stronger rate than before, the slack is being absorbed, we are chipping away,” said Josh Feinman, chief global economist at Deutsche Asset & Wealth Management in New York.

Employment has now grown by more than 200,000 jobs in each of the last five months, a stretch not seen since the technology boom in the late 1990s. That added to signs a plunge in economic output in the first quarter was a weather-driven anomaly. Job growth averaged 231,000 per month in the first half of the year, the best start since 2006.

The jobless rate reached its lowest level since September 2008 despite a swelling of the labour force. Nevertheless, the labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job, was steady at 62.8 percent, a low struck in December for the first time since 1978.

A broader measure of unemployment, which includes people who want a job but have given up searching and those working part-time because they cannot find full-time jobs, fell to 12.1 percent, the lowest level since October 2008. The unemployment rate for Americans who have been out of work for at least 27 weeks fell two-tenths of a percentage point to 2.0 percent, the lowest since February 2009.

These long-term jobless accounted for 32.8 percent of the 9.5 million jobless Americans, down from 34.6 percent in May.  The median duration of unemployment fell to a more than five-year low of 13.1 weeks. But there was a jump in the number of people working part-time even though they want a full-time job.

Fed Chair Janet Yellen has cited low labour force participation and high levels of long-term unemployed and part-time workers as evidence of job market slack that could allow the central bank to bide its time before raising borrowing costs. The Fed has held overnight rates near zero since December 2008.

Job gains were spread across all sectors. Services industries employment jumped by 236,000, the biggest gain since October 2012, while manufacturing payrolls increased by 16,000, an 11th straight monthly rise. Construction jobs advanced for the sixth consecutive month and government employment increased by 26,000.

The length of the average workweek held at a post-recession high of 34.5 hours. Total hours worked rose 0.2 percent. Separate data showed services sector activity expanded strongly in June, while a third report showed exports hit a record high in May, helping to narrow the US trade deficit. Still, trade is expected to weigh on growth in the April-June period for a second consecutive quarter.