Skip to main content
Advertising

Originally published July 3, 2014 at 4:51 PM | Page modified July 3, 2014 at 8:29 PM

  • Share:
           
  • Comments
  • Print

Sizzling jobs report heats up economic optimism

The new jobs exceeded widespread expectations that the economy would add about 200,000 jobs last month. Statisticians also increased May’s already strong preliminary jobs number by 7,000 to 224,000, and April’s number by 22,000 to 304,000.


McClatchy Washington Bureau

Reader Comments
Hide / Show comments
"In June the BLS reports that the number of full-time jobs tumbled by 523K to 118.2 million while part-time jobs soared... MORE
@woodinvillerepublican The average age of those recently hired will reflect a far younger demographic, with the most... MORE
Golly. That's not even close enough to pay for all the handouts just for the illegals currently streaming across the... MORE

advertising

WASHINGTON — Job growth surged in June, capping the best first half since 1999, driving blue-chip stocks to a record high and leading analysts to say the economy is shifting to higher gear.

Employers added a sizzling 288,000 jobs last month, the Labor Department said, pushing the unemployment rate down two-tenths of a percentage point to 6.1 percent, where it last was in September 2008.

Buoyed by the jobs report, the Dow Jones industrial average raced past the 17,000 threshold at the open of trading and stayed there all day.

The new jobs exceeded widespread expectations that the economy would add about 200,000 jobs last month. Statisticians also increased May’s already strong preliminary jobs number by 7,000 to 224,000, and April’s number by 22,000 to 304,000.

“Businesses are finally getting their groove back and hiring more. This signals that the expansion is moving into a stronger phase,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics.

“The job market has kicked into a higher gear. This month’s strong job gain overstates the case, but job growth is now double the pace necessary to reduce unemployment,” Zandi said.

Over the past 12 months, the unemployment rate has fallen by 1.4 percentage points and there are 2.3 million fewer unemployed people. The rate peaked at 10 percent in March 2009.

“Unemployment will soon blow through 6 percent, which will prompt a pickup in wage growth,” predicted Zandi. “Most people have jobs, and care most about how fast their pay is increasing. As wages improve, so too will consumer confidence and spending.”

Getting the jobless rate below 6 percent would cross an important psychological threshold. Unemployment was 4.7 to 6 percent for much of 2007 and early 2008, when the economy was humming right before the crisis.

The sharply falling unemployment rate puts the Federal Reserve in a bind. It keeps the Fed on pace to end its controversial purchases of government and mortgage bonds by year’s end, removing a stimulus.

But because the economy is heating up, it might force the Fed to choose between higher inflation and higher lending rates. The Fed has held its benchmark lending rate near zero since December 2008. But as the economy improves, inflation should pick up, and raising interest rates is how the Fed clamps down.

“Prior to this report, both positive and negative arguments could be made for the health of the labor market. Of course, the stronger the positive arguments are, the greater the likelihood of an end to the Fed’s near-zero interest rate policies,” said Doug Handler, a U.S. economist for forecaster IHS Global Insight.

“We see this report as a new, solid piece of evidence that the labor market is in good shape and is improving.”

President Obama celebrated the news.

“We’ve now seen the fastest job growth in the United States in the first half of the year since 1999. So this is also the first time we’ve seen five consecutive months of job growth over 200,000 since 1999,” Obama said during a tour of a startup company in the nation’s capital.

“And we’ve seen the quickest drop in unemployment in 30 years. So it gives you a sense that the economy has built momentum, that we are making progress,” Obama said.

The jobs growth buried any doubts raised by the 2.9 percent economic contraction from January to June, caused partly by an unusually harsh winter.

“During the first six months of 2014, the labor force rose by 757,000 while household employment jumped by a much bigger 1.64 million,” noted Stuart Hoffman, the chief economist for PNC Financial. “The solid rise in the number of job seekers thus far this year is a sign of growing confidence in the economy on the part of employers and would-be employees.”

All sectors posted gains in the report. Retailers created more than 40,000 jobs last month, and the broad sector of leisure and hospitality added almost as much, with 39,000 new posts.

The professional and business-services sector, composed of better-paying white-collar jobs, led all others with 67,000 new posts. The financial sector added 17,000 posts and health-care hiring remained sluggish but rose by 21,000.

Hiring was uneven within the manufacturing sector, which added 16,000 jobs.



Want unlimited access to seattletimes.com? Subscribe now!

Also in Business & Technology

News where, when and how you want it

Email Icon

Universal preschool for all?

Universal preschool for all?

Get schooled on universal preschool before you vote on it in November. Read our 3-part Education Lab series, starting Sept. 21 in the Seattle Times.

Advertising

Advertising

The Seattle Times photographs

Seattle space needle and mountains

Purchase The Seattle Times images


Advertising
The Seattle Times

The door is closed, but it's not locked.

Take a minute to subscribe and continue to enjoy The Seattle Times for as little as 99 cents a week.

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited seattletimes.com content access is included with most subscriptions.

Subscriber login ►
The Seattle Times

To keep reading, you need a subscription upgrade.

We hope you have enjoyed your complimentary access. For unlimited seattletimes.com access, please upgrade your digital subscription.

Call customer service at 1.800.542.0820 for assistance with your upgrade or questions about your subscriber status.

The Seattle Times

To keep reading, you need a subscription.

We hope you have enjoyed your complimentary access. Subscribe now for unlimited access!

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited seattletimes.com content access is included with most subscriptions.

Activate Subscriber Account ►