The U.S. economy added 222,000 jobs in June, the largest gain since February. Combined with upward revisions to the prior two months, the three-month average gain is 194,000, also the highest since February. Along with a rise in hours worked, a rise in average hourly earnings, and an increase in the labor force participation rate, the report shows that the economy is maintaining solid momentum and that the risk of recession remains low.
Private payrolls added 187,000 jobs in June while government payrolls rose by 35,000. All of the gain in government payrolls came from local governments, where education jobs increased by 22,200 and non-education jobs rose by 13,600. Among private industries, goods producers added 25,000 employees, in line with the average monthly gain over the past year. Among private goods-producing industries, the construction industry continues to lead the way, with 16,000 additional jobs in June. Over the past year, the construction industry has added more than 200,000 jobs, the most of all the goods-producing industries. Meanwhile, the mining and logging category added 8,000 jobs in June while durable-goods manufacturing added 9,000 and nondurable manufacturing lost 8,000.
Private service-producing industries continue to be the main source of jobs creation, adding 162,000 jobs in June. That is ahead of the average monthly gain of 150,000 over the past year. The health care and social-assistance industry was the largest contributor to the gain, adding 59,100 new workers for the month. Other industries with large gains include leisure and hospitality (+36,000), professional and business services (+35,000), and financial services (+17,000). Within the professional- and business-services category, temporary-help firms added 13,000 in June. Temporary-help services are sometimes considered a leading indicator of broader hiring trends. The only private services industry shown that cut employees in June was information services (including publishing, motion picture and recording, broadcasting, telecommunications, and data processing), which declined by 4,000. The information-services category has been reducing jobs for quite some time, losing 61,000 jobs over the past year, or about 5,000 per month.
For the private workforce overall, the average workweek lengthened by 0.1 hours to 34.5 hours for the month, just shy of the cycle high of 34.6 hours in January 2016. Average hourly earnings rose 0.2 percent in June, to $26.25, a rise of 2.5 percent from a year ago. While that is up from 2.4 percent in the prior month, it remains well below the 3.5 to 4.5 percent annual gains seen in the later parts of prior expansions.
The strength of the labor market has been slowly enticing more people into the labor force. The labor force participation rate increased to 62.8 percent in June from 62.7 percent in May. That is up from a multi-decade low of 62.4 in September 2015 (the lowest since October 1977), but remains well below the peak of 67.3 in early 2000. The participation rate prior to the last recession was about 66.0 percent.
The rise in the participation rate added 361,000 people to the labor force. While many found jobs, some were still looking in June, which helped pushed the unemployment rate up slightly to 4.4 percent from 4.3 percent in May. Other measures of underemployment also rose by a tenth or two in June but are well below the peaks during and immediately after the last recession.
Overall, the gains in jobs, combined with the longer workweek and higher wages, pushed the index of aggregate weekly payrolls, a proxy for take-home pay, up 0.6 percent from May and up 4.5 percent from a year ago. Gains above 4 percent should provide support for future consumer spending and help sustain the current economic expansion.