The US created 223,000 jobs in June, with the unemployment rate falling to 5.3 per cent, down from a gain of 254,000 new roles in May.
The unemployment rate fell further from 5.5 per cent in May, pushing it closer to the Federal Reserve’s estimate of the longer-run 5-5.2 per cent. This compares to a low of 4.4 per cent in 2006, just before the financial crisis.
Job growth, however, missed the forecast, with economists expecting the US to add 233,000 jobs and the unemployment rate to dip to 5.4 percent. The jobless rate fell to 5.3 per cent as more people left the workforce altogether.
Chris Williamson, chief economist at Markit, said:
Although behind expectations, and accompanied by news that April and May had collectively seen 60,000 fewer jobs added than previously thought, the latest upturn suggests that the encouragingly strong run of job creation seen in recent years shows few signs of stalling.
Just over five years after unemployment hit 10 per cent, while the pace of job creation has slowed down from the final quarter of 2014 – where the monthly average was 324,000 – investors still expect the Fed to withdraw stimulus from the economy.
An improving labour market is central to expectations surround the Fed lifting interest rates for the first time in close to a decade.
Wage growth, meanwhile, stagnated, due to the labour force receding, with average hourly earnings held at $24.95.
Wage growth – widely seen as a critical indicator of when policymakers will feel comfortable that the economy can withstand higher borrowing costs – failed to impress, remaining a bothersome fly in the ointment of the recovery story. Average hourly earnings were unchanged, meaning wages are up just 2.0% over the past year, missing expectations of a 2.3% rise, Williamson said.
The economy has just finished its sixth year of growth since the end of the recession in June 2009, while the labour market has grown with it, faster wage growth has lagged behind.