U.S. employers added 850,000 jobs last month in response to states’ plans to wind down extended unemployment benefits. According to The New York Times, it was the strongest gain in 10 months and a fresh sign that the labor market’s recovery is gaining momentum. “I think it’s a very solid and strong report and very encouraging that we’re seeing over the last few months continued increase in the net job creation,” Kathy Bostjancic, chief U.S. financial economist for Oxford Economics told the Times. Although she noted that the totals fell below the one million mark that the Federal Reserve chair, Jerome H. Powell, has said he would like to see, she said that “the momentum is moving in the right direction.”
Fox Business reports the unemployment rate rose up to 5.9%. Analysts were expecting the addition of 700,000 and the unemployment rate to fall to 5.7%. May’s unemployment reading was revised higher by 24,000 jobs to 583,000.
The high results of the report “may be a sign that some of the temporary labor shortages holding back the employment recovery are starting to ease,” said Andrew Hunter, senior U.S. economist at research firm Capital Economics. “The acceleration in employment growth was driven by sectors most closely affected by the continued return to normalcy.”
Sizable job gains were seen in leisure and hospitality (+343,000), public and private education (+269,000), professional and business services (+72,000), retail trade (+67,000), and other services (+56,000). But some industries, including construction and healthcare, saw little change.
The job increases came as at least 26 states have ended or announced plans to end the $300 per week supplemental unemployment benefits that are scheduled to expire this upcoming September. Additionally, average hourly wages in June increased 3.6% year over year, helping lure laborers back to work.
Sameer Samana, senior global market strategist at Wells Fargo Investment Institute said that there are signs that the “recovery remains slow and uneven.” He pointed out that the average workweek shrunk from 0.1 hour to 34.7 hours and the labor force participation rate holding steady at 61.8%.
There were 6.8 million fewer workers than in February of last year, just before the COVID-19 pandemic caused a significant amount of the economy to shut down.
Today’s report was “an all-out positive” from a markets perspective, said Seema Shah, chief strategist at Principal Global Investors.