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U.S. job growth picks up
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July 2, 1999: 11:07 a.m. ET
Economy adds 268,000 nonfarm jobs in June; jobless rate rises to 4.3%
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NEW YORK (CNNfn) - The economy resumed adding new jobs in June, but the unemployment rate edged higher, the government said Friday, releasing data that could signal a rise in inflation to central bankers.
The Labor Department said payrolls outside the farm sector grew by 268,000 jobs in June, higher than the 220,000 consensus forecast of economists polled by Reuters. That compared to a loss of 5,000 jobs in May, revised down from the initially reported increase of 11,000 -- and that revision tempered the concern about inflation.
Meanwhile, the jobless rate rose to 4.3 percent from 4.2 percent in May, when expectations were for that rate to remain flat.
The bond market, which staggered at first on the news, soon regained its footing. The 30-year Treasury bond climbed 1/32 in price to yield 6 percent in Friday morning trade.
One possible concern for monetary policy makers was the report's average hourly earnings index, an indicator of inflation pressures, which rose 5 cents, or 0.4 percent, to $13.23. Economists expected a rise of 0.3 percent.
"These numbers are suggesting that a future Federal Reserve tightening will be coming to a theater near you quite soon," Anthony Chan, chief economist at BancOne Investment Advisors, told CNNfn.
"Inflationary pressures are starting to percolate --and the Federal Reserve is going to react to this," Chan added.
Still, the government revised down its job growth estimates for both the two previous months. May's drop in jobs was the first month-to-month decline in nearly 3-1/2 years, since the economy lost 7,000 positions in January 1996.
April's numbers were lowered to 321,000 new jobs, from 343,000 first reported.
"We had downward revisions in both April and May totaling 38,000," Michael Moran, chief economist at Daiwa Securities America, told Reuters. "They tend to dull the June results. It's a good report on the economy, but not one that shows overwhelming strength."
The report comes just two days after Fed policy makers boosted a key short-term interest rate by a quarter point to 5 percent, but returned their so-called bias to neutral -- meaning they are less likely to lift rates in the near future.
The service sector again was the economy's primary engine, adding an above-average 151,000 jobs in June. The construction industry also added jobs, but a sluggish manufacturing sector continued its contraction -- losing 35,000 workers.
Americans were working the same amount as the previous month. The average work week stayed at 34.5 hours, in line with economists' targets.
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Department of Labor
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