Payrolls in U.S. rose 209,000 in July, unemployment at 6.2%

WASHINGTON – Employers in the U.S. added more than 200,000 jobs for the sixth straight month in July, showing the world’s largest economy is making strides toward sustaining faster growth entering the sixth year of expansion. The jobless rate rose as growing confidence prompted more Americans to look for work.

The 209,000 advance followed a 298,000 gain in June that was stronger than initially reported, figures from the Labor Department showed Friday in Washington. The median forecast in a Bloomberg survey of economists called for a 230,000 increase. The jobless rate climbed to 6.2 percent from 6.1 percent, while wages and hours were unchanged from June.

The degree of hiring this year may help trigger a self-reinforcing cycle of gains in spending and job opportunities that will spur the economy. While the labor market has improved, Federal Reserve policy makers this week said they will keep interest rates low until wages accelerate and more discouraged workers find jobs.

“You now have six straight months of greater-than-200,000 job gains,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC in New York, whose 210,000 estimate was among the closest in the Bloomberg payrolls survey. “The labor force rose, and the labor force rises typically when people are feeling better about the backdrop.”

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Survey results

Payrolls estimates in the Bloomberg survey of economists ranged from increases of 160,000 to 310,000. Revisions to prior reports added a total of 15,000 jobs to overall payrolls in the previous two months.

Manufacturing expanded in July at the fastest pace in more than three years, showing factories will help power the economy after a second-quarter rebound, other data showed Friday. The Institute for Supply Management’s index increased to 57.1, the highest since April 2011, from 55.3 a month earlier, the Tempe, Ariz.-based group’s reported. Readings above 50 indicate growth.

Stocks fluctuated as investors sifted through the data. The Standard & Poor’s 500 Index rose 0.1 percent to 1,933.23 at 10:28 a.m. in New York.

Consumer spending rose in June by the most in three months, ending the quarter on a strong note and signaling that job growth will bolster the world’s largest economy, a Commerce Department report showed Friday.

Hourly earnings

Friday’s employment report also showed average hourly earnings were unchanged at $24.45 in July. They were up 2 percent over the past 12 months. The average work week for all employees held at 34.5 hours.

Construction companies and factories were among those that added more to payrolls in July than a month earlier. Employment gains cooled at retailers, business services and education and health services.

The agency’s survey of households, used to derive the unemployment rate, showed more people entered the labor force. The so-called participation rate, which indicates the share of working-age people in the labor force, increased to 62.9 percent from 62.8 percent a month earlier, which matched the lowest since March 1978.

After 11 months of unemployment, Dennis Haffner, 47, started a new job this week. Haffner had $6.42 in his savings account and was staring down having to move back home to his parents’ house when he landed the position.

New job

“This is what I’ve been looking for,” said Haffner, who lives in Manchester, Conn., and will be working in business process improvement at an insurance company. “This from day one seemed like a good fit, a good opportunity for me. Things fell into place.”

He was seeing more employment opportunities towards the end of his search than at the start, he said.

“There was a lot of discouragement throughout the whole process,” he said. “Things didn’t really start to happen until the end of January, beginning of February, and then I saw an abundance.”

Friday’s figures showed employment at private service providers increased 140,000 in July, the smallest gain in six months. The slowdown in hiring was broad-based in that category.

At the same time, goods producers took on workers at a faster rate. Construction companies added 22,000 workers and factory employment climbed 28,000 last month, led by a 14,600 gain in payrolls at auto plants that was the biggest since April 2013.

Payroll forecast

Economists surveyed by Bloomberg from July 3 to July 9 see the U.S. economy adding 215,000 jobs on average each month this year. That would be up the fastest pace of job growth since 1999, when the economy gained 265,000 jobs per month on average.

While the economy is creating more jobs, wage growth has lagged behind, increasingly becoming a focal point for Fed policy makers.

Fed Chair Janet Yellen told lawmakers last month that while her view of the economy has turned “more positive,” she’s concerned about low participation in the labor force and sluggish wage growth.

Friday’s report showed 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 12.2 percent from 12.1 percent.

Fed meeting

Federal Open Market Committee officials this week continued to pare monthly asset purchases as the job market strengthens and the threat of disinflation diminishes. Nonetheless, they said in a statement that “a range of labor-market indicators” have shown “significant underutilization of labor resources.”

Even so, growing demand could cut into remaining slack.

Gross domestic product rose at a 4 percent annualized rate in the second quarter after shrinking 2.1 percent from January through March, Commerce Department figures showed this week. Gains in consumer spending and business investment spurred the rebound.

Motor vehicles sold in June at a 16.9 million annualized rate, the strongest since 2006, according to data from Ward’s Automotive Group.

Strong demand for cars is one reason New York-based aluminum maker Alcoa Inc. is hiring. A $300 million dollar expansion at Alcoa Inc.’s Davenport, Iowa facility led to 150 new full-time jobs, said Rob Woodall, manufacturing director at the plant.

“This is following the growth in automotive, but this is also because of an expansion of the use of aluminum in automotive,” Woodall said during an interview at the facility, which boasts the world’s largest aluminum rolling mill.

Manufacturer hiring

“We’re continuing hiring” past the initial 150 as Alcoa’s workforce ages and demand strengthens, Woodall said. Alcoa is also adding automotive capacity in Alcoa, Tenn. “This isn’t the only place we’re adding jobs.”

Fed officials are watching the labor market as they get closer to completing their bond-purchase program later this year and start considering the timing of the first interest-rate increase since 2006. The Fed’s Open Market Committee has pared its monthly asset-buying to $25 billion.

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  1. Well people…if you go to http://www.bls.gov/lau/stalt.htm you will see that, at Level U6, we’re still at FIFTEEN POINT THREE PERCENT (15.3%)…now California and Nevada are TIED for the bottom/last place, with Arizona coming in right behind them and RI next in line….