POSTED: 01:30 a.m. HST, Jul 06, 2013
WASHINGTON » U.S. employers are sending a message of confidence in the economy — hiring more workers, raising pay and making the job market appear strong enough for the Federal Reserve to slow its bond purchases as early as September.
The economy gained a robust 195,000 jobs in June and many more in April and May than previously thought. The unemployment rate remained 7.6 percent in June because more people started looking for jobs — a healthy sign — and some didn't find them. The government doesn't count people as unemployed unless they're looking for work.
The Labor Department's report Friday pointed to a U.S. job market that's showing surprising resilience in the face of tax increases, federal spending cuts and economic weakness overseas. Employers have added an average 202,000 jobs for the past six months, up from 180,000 in the previous six.
The job growth is being fueled in part by consumer spending and the housing recovery. Consumer confidence has reached a 5-1/2-year high and is helping drive up sales of homes and cars. Hiring was especially strong in June among retailers, hotels, restaurants, construction companies and financial services firms.
"The numbers that we're seeing are more sustainable than we thought," said Paul Edelstein, U.S. economist at IHS Global Insight, a forecasting firm.
"We're seeing better job numbers, the stock market is increasing and home prices are rising."
Average pay also rose sharply last month. It's exceeded inflation this year after barely keeping pace since the Great Recession ended four years ago. Average hourly pay rose 10 cents in June to $24.01. Over the past 12 months, it's risen 2.2 percent. Over the same period, consumer prices have increased 1.4 percent.
Stocks surged Friday. The Dow Jones industrial average jumped 147 points, nearly 1 percent. The yield on the 10-year Treasury note soared to 2.73 percent, its highest point since August 2011, from 2.51 percent late Wednesday.
That's a sign that investors think the economy is improving and that the Fed will slow its bond buying this year. If it did, long-term rates would likely rise.
Friday's report showed that the U.S. economy added 70,000 more jobs in April and May than the government had previously estimated — 50,000 in April and 20,000 in May.
The Fed has been buying $85 billion in Treasury and mortgage bonds each month since late last year. The purchases pushed long-term interest rates to historic lows, fueled a stock rally and encouraged consumers and businesses to borrow and spend.