■ Average hourly earnings rose by 0.2 percent after growing by 0.3 percent in May. The year-over-year gain is now 2.7 percent.
Arriving on the ninth anniversary of the recession’s end, the latest jobs numbers cap a string of encouraging economic reports. Many estimates for growth in the second quarter are bouncing above 4 percent. The manufacturing sector buzzed with activity last month, and spending on construction rose. New jobless claims are dragging along at historically low levels. And many consumers displayed their confidence in the economy by kicking off the summer with a new car purchase.
“I’m really excited to see that the labor force is growing,” said Catherine Barrera, chief economist of the online job site ZipRecruiter. “There were some people who weren’t participating in the labor force who are now being encouraged to return, so I’m not concerned about the uptick in unemployment.”
Another 601,000 Americans joined the labor force last month. Hiring in the manufacturing sector was particularly strong at 36,000, while the retail sector slumped, losing 22,000 jobs. Business and professional services as well as health care also had strong showings.
Jim O’Sullivan, chief economist of High Frequency Economics, agreed that despite growing trade tensions, the employment numbers were impressive. “The surprise today was that the wage numbers didn’t accelerate more,” Mr. O’Sullivan said. That holds wage gains behind the inflation rate.
Combined with a bump up in the jobless rate (because more people were working), the modest wage increase should “take a little bit of pressure off the Federal Reserve to step up the pace of tightening,” Mr. O’Sullivan said, referring to the central bank’s setting of benchmark interest rates.
Over the past year, average monthly payroll gains have hovered around 200,000, and hiring has been running ahead of growth in the labor force. “There’s a gap there,” he noted, and without a steep and persistent plunge in hiring, “the unemployment rate is going to keep falling.”
Anxieties over a harmful trade war, however, continue to cast shadows as $34 million in additional tariffs on China went into effect on Friday, and the Chinese said they would retaliate. “They’re playing with fire, really,” Mr. O’Sullivan said of the Trump administration’s trade policies. The jobs report over all was very encouraging, he said, though he added, “We could do with a scare in these numbers to force trade negotiations along.”
The latest surveys of business owners around the country were full of comments expressing dismay with the uncertainty generated by tariffs, whether newly imposed or threatened.
Last week, General Motors said that tariffs could lead to “less investment, fewer jobs and lower wages.” The motorcycle manufacturer Harley-Davidson, based in Wisconsin, announced it would shift some production overseas to sidestep retaliatory tariffs imposed by European countries.
The United States Chamber of Commerce, warning that escalating tariffs would result in “lost sales and ultimately lost jobs here at home,” published a state-by-state breakdown this week showing exports that could be harmed along with estimates of the number of jobs that depend on global trade.
And on Thursday, the minutes from last month’s meeting of Federal Reserve policymakers were released. “Most participants noted that uncertainty and risks associated with trade policy had intensified,” the Fed said, and it was “concerned that such uncertainty and risks eventually could have negative effects on business sentiment and investment spending.”
Chasing Higher Wages
As the jobless rate falls, employers’ complaints about their inability to find qualified, reliable workers mount.
“There’s more jobs than there are people available for jobs — at every level,” said Joe Galvin, chief research officer of Vistage, an association of small-business owners and executives. In a Vistage survey last month, an overwhelming share of employers spoke of their frustration in finding people to fill openings on the factory floor and in the executive suite, Mr. Galvin said.
To retain workers as well as attract new ones, employers say they are increasing pay, sweetening benefits packages and trying to create an appealing work culture.
Yet workers, particularly in lower-wage sectors, have complaints of their own — particularly about the slow pace of pay increases. Many employers limit hours to avoid paying benefits like health insurance. Work shifts frequently change with little notice, and wage increases are still insufficient to cover living costs. Stability and security are often scarce.
Child care, for instance, is an industry known for high turnover rates, low pay and a predominance of female workers.
“We are always looking for job candidates,” said Gigi Schweikert, president and chief operating officer of Lightbridge Academy, which operates child care facilities. “While many industries can move toward automation,” she said, “you can’t in caring for young children.”