US economy adds 850,000 jobs in June as wages rise

Summary

  • It was the biggest gain since August 2020, exceeding economists' estimates but in line with their expectation of a continued improvement in the labor market.
  • The US economy had added 583,000 and 269,000 new jobs in May and April, respectively.
  • Also, many workers who lost their jobs last year opted to retire rather than return to their old jobs.

The US economy has added 850,000 jobs in June as markets continue to see strong demand and recruiters hike workers' salaries amid a mounting staff crunch, the labor department data showed on Friday.

It was the biggest gain since August 2020, exceeding economists' estimates but in line with their expectation of a continued improvement in the jobs market. The US economy had added 583,000 and 269,000 new jobs in May and April, respectively.

Additionally, the unemployment rate increased to 5.9% from 5.8% in May, partly because the number of job seekers grew, the labor department said. Employers also had increased the staff wages to retain employees and encourage others to join work amid a lingering labor shortage in the market.

Source: Pixabay.

Also Read: US home prices surged 23% in May as supplies fell

Earlier, questions were raised if the government stimulus checks had played any role in keeping people away from work as they will forgo the monetary benefits if they start work.

The average hourly salaries of private-sector workers rose by 3.6% in June compared to the corresponding period a year earlier. Compared to the wages in February 2020, the average hourly earnings rate was 6.6%, well above the May inflation figures.

According to the labour department's consumer-price index, inflation had jumped to 3.8% in May from a year earlier. Last month's job growth could also be attributed to the rapid coverage of vaccination in the US, which helped lessen people's concerns of contracting the virus if they venture out and the recommencement of children daycare centres, allowing parents to resume office.

Also Read: Fed signals rate hike by 2023, expects 7% GDP growth this year

Leisure and hospitality businesses, such as restaurants and bars, amusement parks, sports venues, and retailers, which were the worst hit in the pandemic, contributed the most jobs. They also saw a nearly 8% jump in their hourly wages in June from the pre-pandemic level.

But, despite a significant improvement in the labor market, the latest figure is still short of 6.8 million jobs from the numbers in February 2020, while the unemployment rate continues to remain above the pre-pandemic level of 3.5%. Also, many workers who lost their jobs last year opted to retire rather than return to their old jobs.

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