New York (TIP): The US economy accelerated in June, with employers adding 2, 88,000 jobs, well above the rate of hiring recorded in the first five months of 2014 and another sign that growth is finally rebounding. The labour department also said on Thursday that the unemployment rate fell 0.2 percentage point to 6.1 per cent, the lowest since September 2008, when the economy’s fortunes turned sharply lower as Lehman Brothers collapsed and the financial crisis ensued. Nearly six years later, some of the scars remain — like a historically low rate of Americans in the work force.
But the job market has been showing signs of health, even as the overall economic growth rate has been anemic. Unemployment has come down from 7.9 per cent at the start of 2013, and the average monthly gain in payrolls has been above 2, 00,000 for the last five months in a row. The pace of hiring in recent months has been stronger despite a very weak first quarter, when the economy shrank at an annual rate of 2.9 per cent.
Although the weakness was initially blamed on weather, as well as more technical factors like inventory swings, the depth of the contraction caught some economists off guard, especially those who began the year with a more positive outlook for 2014. Economic growth is thought to have picked up in the second quarter, which ended Monday, with experts estimating a growth rate of just over 3 per cent in the period.
The June jobs data suggests their optimism is finally at least somewhat justified. In fact, the total number of people employers are estimated to have hired in May was revised upward by 7,000 to 2,24,000. On Wednesday, a private survey of payrolls by ADP showed a gain of 2,81,000 jobs, well above the 2,05,000 increase economists had been expecting for June.
The labour department report on Thursday was well above expectations, which had been moving higher in recent days. The average gain anticipated by Wall Street economists surveyed by Bloomberg before the release stood at 215,000, with unemployment remaining flat at 6.3 per cent. The monthly jobs report typically comes on the first Friday of each month but was moved up a day because the federal government is closed on Friday for the holiday.