The U.S. economy added new jobs in July, and the unemployment rate increased slightly to 6.2 percent (from 6.1 percent). Economists surveyed by Bloomberg were expecting about 230,000 new jobs. But the positive numbers for July make it six consecutive months of job gains above 200,000, the longest stretch since 1997. Job growth so far this year has averaged 229,000 a month, faster than last year’s pace of 194,000 and far ahead of the 2010 pace of just 88,000 per month.
Revisions added an extra 15,000 jobs to the prior two months, including 10,000 to June’s already sizable 288,000 gain. It’s the first time since February that the unemployment rate has risen, but the change is well within the margin of error. The report showed that more people are starting to enter the labor force and look for work—a good sign, although one that ends up pushing up the unemployment rate.
There were far more people entering the labor force last month (329,000) than there were jobs to accommodate them. Still, the jobless rate has fallen more than a full percentage point in the past 12 months, down from 7.3 percent last August. The share of the population participating in the labor force is still at lows not seen since the 1970s, at 62.9 percent. But that decline has at least slowed this year. The labor force participation rate has risen by 0.1 percentage points so far in 2014, while the jobless rate is down 0.5 percentage points.
Job gains were solid across a number of sectors: 47,000 in professional and business services; 28,000 in manufacturing; 15,000 in the auto sector alone; 27,000 in retail. The construction industry had its best month since April, adding 22,000 workers. Even government hiring was up 11,000. That’s mostly on the back of local governments, which added 12,000 jobs. The U.S. Postal Service trimmed its workforce by 1,400 jobs, and state governments shed 3,000 workers.
Going into the report, a lot of economists were focused on wage gains. Over the past year, average weekly earnings for all private-sector workers were up a little more than 2 percent, from $824 a week to $843. In June, weekly wages increased by 35 cents. Buried under that number is a much better picture for nonsupervisory workers, who boosted their average earnings by more than a dollar a week, from $693.21 to $694.56. Over the past 12 months, these nonsupervisory workers, who tend to be lower and middle management and make up a larger share of the workforce, saw weekly earnings rise 2.8 percent, solidly above the rate of inflation.
This probably doesn’t do much to change the Federal Reserve’s pace of reducing its bond purchases. Even though it’s been a nice year for the labor market, there is still a lot of slack out there, a lot of people underemployed working part time for not a lot of money. And though the number of unemployed in the U.S. has declined by 1.7 million over the past 12 months, there are still 9.7 million people (PDF) who can’t find work.