The American economy, this month entering its seventh year of recovery from the Great Recession, still has some legs: Employers in June added a solid 223,000 jobs across a broad spectrum of service industries.
But Thursday’s Labor Department report, released a day earlier than usual because of the Fourth of July holiday, showed that those legs are a bit wobbly. Workers’ earnings, after a promising increase in May, were flat last month.
In fact, many experts had been looking for an uptick in the labor force — those who are working or looking for work — as the unemployment rate has dropped and private-sector employers have added a decent batch of new jobs month after month. But instead, the so-called labor participation rate fell sharply last month to the lowest level since October 1977.
That drop, along with stagnant average wages, points to softness in the economy — and is likely to give Federal Reserve officials pause in raising interest rates this September, as many analysts had forecast.
“The 223,000 payroll numbers were nice, but outside of that, it was pretty flat,” said Harry Holzer, professor of public policy at Georgetown University. “Labor markets remain too weak to put consistent pressure on wages.”
The overall job growth in June was in line with analysts’ expectations and provided a reassuring sign that hiring had bounced back from the winter slowdown and remained steady at a time of rising global turmoil. The eurozone is in the throes of the Greek debt crisis, and China and other emerging economies are weakening.
Encouragingly, the hiring in June was broad-based. It was led by business and professional services, a group that includes high-paying engineers and computer designers as well as lower-wage temporary-help workers.
Retail, healthcare and finance businesses also added a healthy batch of jobs. But the energy industry continued to downsize; employment in manufacturing slowed, and construction and government were flat.