U.S. businesses add 223,000 jobs in June, wages little changed

An increase in June payrolls followed smaller gains in the prior two months and wages were little changed as U.S. job market reflected a more moderate pace of economic growth.

The addition of 223,000 jobs followed a 254,000 increase in the prior month that was less than previously estimated, a Labor Department report showed Thursday in Washington. The jobless rate fell to a seven-year low of 5.3 percent as more people left the labor force.

The figures indicate corporate managers are confident they can temper hiring and meet demand against a backdrop of stronger consumer spending and feeble overseas markets. At the same time, more moderate job gains may still be enough to reduce the unemployment rate, consistent with the Federal Reserve’s perceived timetable to raise borrowing costs by year-end.

“The job market still has a ways to go but we’re making progress,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report.

The median forecast in a Bloomberg survey called for a 233,000 advance. Estimates of 97 ranged from gains of 160,000 to 350,000 after a previously reported 280,000 advance for May. Revisions to prior reports subtracted a total of 60,000 jobs from payrolls in the previous two months.

In the Mecklenburg County, the jobless rate rose to 5.5 percent in May, the most recent month for which data is available, from 4.9 percent in April, the NC Commerce Department reported Wednesday. In May, the county added almost 3,500 jobs.

The economy has just completed its sixth year of expansion since the recession ended in June 2009. While the job market has rebounded, faster wage growth has been slow to follow suit.

Average hourly earnings at private employers held at $24.95. They increased just 2 percent over the 12 months ended in June, following a 2.3 percent gain the prior month. They’ve posted a 2 percent gain on average since the current expansion began.

Seasonal adjustments, or a calendar bias, probably explain the downward pressure on the wage figures in June after artificially boosting them in May, according to economist Ted Wieseman of Morgan Stanley and Lou Crandall, chief economist at Wrightson ICAP LLC.

The unemployment rate, which is derived from a separate Labor Department survey of households, fell from 5.5 percent and is the lowest since April 2008. The decrease reflected fewer Americans in the labor force.

The participation rate, which indicates the share of the working-age people in the labor force, decreased to 62.6 percent, the lowest since October 1977, from 62.9 percent.

Government payrolls were little changed in June after a 4,000 increase in May. Employment at state and local agencies is often influenced this time of year by swings in the timing of school closings for summer recess.

Retailers increased payrolls by 32,900. Employment in leisure and hospitality rose 22,000.

Factories increased payrolls by 4,000 after a 7,000 gain a month earlier. Manufacturing and mining have been hurt by cutbacks in drilling and exploration following the plunge in oil prices.

The improving outlook for the labor market is among the reasons Fed policy makers have said they may begin to raise the benchmark interest rate this year from near zero.

Fed Chair Janet Yellen has said she expects the central bank to raise borrowing costs this year, and that subsequent increases will be gradual without following a predictable path.

“Although progress clearly has been achieved, room for further improvement remains,” Yellen said at a June 17 press conference. She described wage growth as “relatively subdued.”

This story was originally published July 2, 2015 at 9:05 AM with the headline "U.S. businesses add 223,000 jobs in June, wages little changed."