In June Jobs Report, Positive Numbers Belie Frustrations Beneath Surface
RENEE MONTAGNE, HOST:
The Labor Department says the U.S. economy continued to add jobs at a pretty healthy pace last month. Employers added 223,000 jobs to their payrolls. But there's also a worry for the economy. The report says people continue to leave the labor force in large numbers. NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: The report says there was job growth in the retail, health care and leisure and hospitality sectors. Even manufacturing managed a slight increase despite the strong dollar. Stuart Hoffman is chief economist at PNC Financial Services.
STUART HOFFMAN: It's a good report. It shows that the economy continued to create jobs and grow faster in the second quarter than in the weak start to the year.
ZARROLI: The report says 60,000 fewer jobs were created in April and May than first thought. Still, the U.S. economy has been adding jobs this year at a rate of a little more than 200,000 a month. Seven years into the recovery, the job market continues to improve. The unemployment rate dipped from 5.5 to 5.3 percent. That's the lowest it's been since April, 2008, and it means that fewer people were looking for work. But the report also says the labor participation rate fell three-tenths of a percentage point between May and June. Bernard Baumohl is chief global economist at the Economic Outlook Group.
BERNARD BAUMOHL: A growing number of people have retired, typically in their 50s and 60s. And then there are those that have simply entered the underground economy. And by the way, that is not an insignificant number.
ZARROLI: Baumohl says the underground economy now represents as much as 10 percent of the nation's gross domestic product. The report also contains another potentially worrisome number. Wages were flat for the month and have grown just 2 percent over the past year. But Stuart Hoffman says there are better measures of wage growth that will be released this month, in particular the employment cost index. He says the Federal Reserve will look at those numbers when deciding whether to raise interest rates.
BAUMOHL: If the data does come in, as I think, on the strong side, then September still sets up for me as the initial quarter-point rate hike by the Fed.
ZARROLI: There's a pretty broad consensus now that the Fed will finally begin raising rates again soon. Hoffman says this morning's report is a bit weaker than expected, but it doesn't really change the likelihood of at least one rate hike this year. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.