Jobs in the United States earn the most in 10 months; employers raise wages, soften benefits

WASHINGTON, July 2 (Reuters) – U.S. businesses hired the most workers in 10 months in June, raising wages and providing incentives to attract millions of unemployed Americans to sit at home, a tentative sign that a labor shortage – of work weighing on the economy began to be felt. ease.

The Department of Labor’s closely watched employment report on Friday showed that 151,000 people entered the workforce last month, although the proportion of working-age Americans who have or are looking for a job one has not moved from the narrow range it has been in since June 2020.

The acceleration in hiring suggests that the economy ended the second quarter on strong momentum, following a reopening made possible by COVID-19 vaccinations.

“While companies still struggle to fill positions, the staffing issues don’t appear to be as severe given the current payroll recovery,” said Sarah House, senior economist at Wells Fargo in Charlotte, Carolina. North.

The establishment survey showed that the non-farm payroll increased by 850,000 jobs last month. The economy created 15,000 more jobs in April and May than previously reported. Employment is about 6.8 million jobs below its February 2020 peak.

Economists polled by Reuters predicted that the wage bill would increase by 700,000 jobs. Women, who have been hardest hit by the pandemic, have held nearly half of the jobs created last month. There is a record 9.3 million job vacancies.

President Joe Biden hailed the resumption of hiring.

“This is historic progress, pulling our economy out of the worst crisis in 100 years, driven in part by our dramatic progress in immunizing our nation and fighting the pandemic as well as other elements of the US bailout.” Biden said in remarks. to the White House. Read more

The leisure and hospitality industry created 343,000 jobs, accounting for 40% of employment gains in June. More than 150 million people are fully immune to COVID-19, which has resulted in the lifting of pandemic-related restrictions on businesses and mask mandates. Government employment jumped by 188,000 jobs, driven by state and local government education, which were boosted by fewer layoffs at the end of the school year compared to the previous year.

Manufacturing added 15,000 modest jobs, with employment in motor vehicle assembly plants declining by 12,300. A global semiconductor shortage has forced some automakers to cut production. Other manufacturing industries are also struggling with shortages of raw materials and workers.

The construction wage bill contracted for the third consecutive month. Although the sector remains supported by strong demand for housing, the scarcity of labor and expensive raw materials such as lumber hamper housing construction.

Politicians, businesses and some economists have blamed improved unemployment benefits, including a weekly $ 300 government check, for the labor shortage. The lack of affordable child care and fears of contracting the coronavirus have also been blamed for keeping workers, mostly women, at home.

There have also been retirements linked to the pandemic as well as career changes. Economists generally expect the squeeze in labor supply to ease in the fall with the reopening of schools and the expiration of government-funded unemployment benefits, but they warn that many unemployed people will probably never return to work.

Record US stock prices and soaring real estate values ​​have also encouraged early retirements. About 3.4 million people have left the labor market since February 2020.

Stocks on Wall Street rose, with the S&P 500 Index (.SPX) and the Nasdaq Composite (.IXIC) hitting record highs. The dollar fell against a basket of currencies. US Treasury prices were higher. Read more

INCREASE IN THE UNEMPLOYMENT RATE

Average hourly wages rose 0.3% last month, led by low-wage industries, after gaining 0.4% in May. This brought the year-on-year wage increase to 3.6% from 1.9% in May. Annual wage growth has been partly flattered by so-called base effects after a sharp drop in June.

According to the job search engine, in fact, 4.1% of job postings advertised hiring incentives in the seven days ending June 18, more than double the share of 1, 8% of the week ending July 1, 2020. Incentives, which included signing bonuses, retention bonuses, or one-time cash payments upon hire ranged from $ 100 to $ 30,000 over the course of the year. month ended June 18.

Some restaurant jobs pay up to $ 27 an hour plus tips, according to posts on Poachedjobs.com, a national job site for the restaurant and hospitality industry. The federal minimum wage is $ 7.25 an hour, but some states have higher minimum wages.

The average work week fell from 34.8 hours to 34.7 hours. With employment not expected to return to pre-pandemic levels until 2022, rising wages are unlikely to worry Federal Reserve officials, even if inflation rises due to supply constraints. Fed Chairman Jerome Powell has repeatedly said he expects high inflation to be transient.

The US central bank last month opened discussions on how to end its massive bond purchases during the crisis. Read more

“We still believe that Fed officials will need several months of strengthening to meet their ‘substantial progress’ reduction benchmark,” said Jim O’Sullivan, chief US economist at TD Securities in New York. .

Details of the smaller and volatile household survey, from which the unemployment rate is derived, were mixed. Household employment fell by 18,000 in June. But according to Michael Feroli, chief US economist at JPMorgan, by adjusting “the household measure to match the concept of employment used in the establishment survey, the figure has increased by 604,000.”

The unemployment rate rose to 5.9% from 5.8% in May. The unemployment rate continued to be underestimated by people mistakenly classifying themselves as “employed but absent from workâ€. Without this misclassification, the unemployment rate would have been 6.1% in June.

But the number of people working part-time for economic reasons fell by 644,000. As a result, a broader measure of unemployment, which includes people who want to work but have given up looking and those who work part-time because ‘they can’t find full-time jobs, fell to a 15-month low of 9.8% from 10.2%. in May.

Women continued to return, with 148,000 re-entering the workforce. This brought the participation rate of women to 57.5% against 57.4%. The overall participation rate remained unchanged at 61.6%.

Reporting by Lucia Mutikani; Additional reporting by Andrea Shalal Editing by Dan Burns, Chizu Nomiyama, Andrea Ricci and Paul Simao

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