US wage growth remains tepid
U.S. job growth rebounded strongly in June, but moderate wage gains and mounting evidence that the economy was slowing sharply could still encourage the Federal Reserve to cut interest rates this month.
The Labor Department’s closely watched employment report on July 5 suggested May’s sharp slowdown in hiring was probably a fluke.
Lack of concrete progress in resolving an acrimonious trade war between the United States and China, however, means the bar could be very high for the Federal Reserve not to lower borrowing costs at its July 30-31 policy meeting.
The trend in wage growth has slowed from late last year when wages were rising at their fastest rate in a decade, pointing to moderate inflation. Average hourly earnings rose six cents or 0.2 percent after gaining 0.3 percent in May. That kept the annual increase in wages at 3.1 percent for a second straight month.
Nonfarm payrolls increased by 224,000 jobs last month, the most in five months, the government said.
Job growth averaged 172,000 per month in the first half. Hiring has cooled from an average of 223,000 jobs per month in 2018. The pace, however, remains well above the roughly 100,000 needed to keep up with growth in the working age population.
The unemployment rate rose one-tenth of a percentage point to 3.7 percent as people entered the labor market. Some of the recent drop in the jobless rate has been because of people leaving the labor market.
A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, rose to 7.2 percent in June from 7.1 percent in May.
Job growth has slowed in part as employers struggle to find qualified workers. There are about 7.4 million job openings.