The report released by the Department of Labor on Friday showed that despite the increase in unemployment rate, the US economy added slightly more jobs in June than expected.
Nonfarm payrolls increased by 206,000 for the month, surpassing Dow Jones’ forecast of 200,000. However, this is lower than the revised gain of 218,000 in May, which was significantly reduced from the initial estimate of 272,000.
Unexpectedly, the unemployment rate rose to 4.1%, marking its highest level since October 2021. This presents a mixed signal for Federal Reserve officials who are considering their next steps in monetary policy. The forecast had projected the unemployment rate to remain at 4%.
The increase in unemployment coincided with a rise in the labor force participation rate, which measures the percentage of employed or actively seeking work individuals in the working-age population, reaching 62.6%, an increase of 0.1%.
The broader unemployment rate, which includes discouraged workers and those working part-time for economic reasons, remained unchanged at 7.4%.
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While job creation in June exceeded expectations, it was mainly due to a significant increase of 70,000 jobs in government administration. The healthcare sector, which remains a consistent leader, added 49,000 jobs, and social assistance contributed 34,000.
In terms of wages, average hourly earnings increased by 0.3% for the month and 3.9% over the past year, both in line with forecasts.