Strong overall labor report welcomed by industry but it may delay rate cut
The June jobs report shows that 224,000 jobs were added to the US economy, beating expectations.
The US Department of Labor stats also reveal that wages increased at or above 3% year over year for 11 straight months. Wage growth for production and non-supervisory workers increased 3.4% over the past 12 months.
Meanwhile, an analysis of the data by Associated Builders and Contractors shows that the construction industry added 21,000 jobs in June and 224,000 year-over-year (3.1%).
Year-over-year there was a 0.4% increase in non-residential building jobs and a 3.6% rise in residential building jobs.
“In short, the industry is still strong,” said ABC Chief Economist Anirban Basu. “Finding and retaining skilled workers remains a primary issue, implying that compensation growth will continue to increase. This is a challenge that construction firms share with firms operating in many other industries, which means that the cycle of wage growth coupled with robust consumer spending remains firmly in place.”
Basu added that the overall jobs report shows that the economy is not slowing as fast as data suggested earlier in the year.
Rate cut less likely
Doug Duncan, Chief Economist at Fannie Mae, commented that the robust jobs report should ease some of the pressure that the Fed faces to cut rates at the upcoming July FOMC meeting.
He also noted that the jobs data reflect strength in the overall US economy.
“Payroll growth has averaged 171,000 over the last three months, the average workweek remained steady at 34.4 hours, and average hourly earnings continue to grow at a strong year-over-year pace of 3.1%,” Duncan said. “In the household survey, labor force participation ticked up in June, reinforcing the impression that the participation rate has stabilized after trending downward for several years. Increased participation led to a slightly higher unemployment rate this month, as people returned to the labor force from the sidelines.”
