WASHINGTON - Employment increased more than forecast in June, wages picked up and the U.S. jobless rate held close to a four-year low as the world’s largest economy weathered the effect of higher taxes and federal budget cuts.
Payrolls rose by 195,000 workers for a second straight month, the Labor Department reported today in Washington. The median forecast in a Bloomberg survey projected a 165,000 gain after a previously reported 175,000 increase in May. The jobless rate stayed at 7.6 percent, while hourly earnings in the year ended in June advanced by the most since July 2011.
Job gains and a rebound in housing are shoring up Americans’ finances and boosting expectations that the economy will gain momentum even after the payroll tax increased and government agencies began to cut spending. Federal Reserve policy makers have said they’ll start to trim bond purchases before the end of the year as unemployment falls.
“The job market’s as good as it was last month,” Drew Matus, deputy U.S. chief economist at UBS Securities LLC in Stamford, Conn., said before the report. “The labor market is going to continue to be a source of support for the U.S. economy both in terms of income and in terms of consumer willingness to spend.”
Forecasts of the 91 economists surveyed for June payrolls ranged from increases of 77,000 to 220,000. The Labor Department surveys businesses and households for the pay period that includes the 12th of the month.
Revisions to the prior two months’ payrolls reports added a total of 70,000 jobs to the employment count in April and May.
Retailers, professional and business services, health care and leisure and hospitality businesses led the payroll gains in June. Manufacturers cut jobs for a fourth straight month and government payrolls dropped.
The household survey, used to calculate the unemployment rate, showed that more people entered the labor force and most of them were able to find work.
At the same time, the report showed an increase in discouraged workers and in the number of people working part time who would prefer full-time employment.
Private payrolls, which don’t include government agencies, increased 202,000 in June after a 207,000 gain the prior month.
Factories reduced payrolls by 6,000 in June, while construction companies added 13,000, the most in three months, today’s report showed.
Today’s employment report also showed average hourly earnings rose 0.4 percent to $24.01 in June from the prior month. They were up 2.2 percent over the past 12 months.
The underemployment rate -- which includes part-time workers who’d prefer a full-time position and people who want to work but have given up looking -- rose to a four-month high of 14.3 percent from 13.8 percent.
Job gains and rising home values are shoring up Americans’ finances and boosting expectations that the economy is gaining steam.
Retailers added 37,100 jobs in June, with most of the increase coming from more hiring at motor vehicle dealerships and home-improvement outlets.
Automakers are one standout in the recovery, enjoying gains in sales fueled by improved confidence and cheap credit. New cars and trucks sold in June at the fastest pace since 2007 as American drivers replaced aging vehicles and a rebound in housing construction moved trucks off dealer lots. That helped new car sales beat estimates last month, giving a lift to General Motors Co. and Ford Motor Co. Brisk sales are boosting hiring at dealerships.
“We would take 10 sales people in a heartbeat,” said Don Hicks, owner of Shortline Auto Group in Aurora, Colo., which employs about 150 people at four dealerships. “If they were available and trained, or trainable, we’d take another five or six technicians. It’s crazy trying to find people.”
Industry sales climbed to a 15.9 million annualized pace, exceeding the 15.5 million median estimate of economists surveyed by Bloomberg. That’s the best monthly pace since 16.1 million in November 2007 and compares to 14.3 million a year earlier, according to data from Ward’s Automotive Group.
“We’re a little island of prosperity,” Hicks said. “We’re leading the country out of recession.”
Other manufacturers aren’t doing as well as the recovery continues to struggle against crosscurrents. Americans are feeling the effects of a two percentage-point increase in the payroll tax that took effect in January and growth is being restrained by weakness overseas and federal budget cuts that began in March.
Financial markets also remain fragile after Fed Chairman Ben S. Bernanke said the central bank could start reducing its $85 billion in monthly bond purchases later this year and end the program in the mid-2014. Bernanke said last month he expects the jobless rate to be around 7 percent when the Fed stops buying bonds.