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U.S. Employers Sharply Stepped Up their Hiring in June: Report

U.S. employers sharply stepped up their hiring in June, adding a robust 224,000 jobs, an indication of the economy's durability

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FILE - A worker is shown atop a building under construction in Hillsborough, N.C., July 1, 2019. The Labor Department reported July 5 that U.S. employers sharply stepped up hiring in June, adding a robust 224,000 jobs. VOA

U.S. employers sharply stepped up their hiring in June, adding a robust 224,000 jobs, an indication of the economy’s durability after more than a decade of expansion.

The strength of the Labor Department’s jobs report issued Friday could complicate a decision for the Federal Reserve late this month on whether to cut interest rates to help support the economy. Most investors have anticipated a rate cut in July and perhaps one or two additional Fed cuts later in the year. That scenario may be less likely now.

Stocks sold off early Friday before paring their losses. The Dow Jones industrial average was down about 20 points in late-afternoon trading. But the yield on the 10-year U.S. Treasury note climbed to 2.05% from just under 2% before the jobs report, reflecting a view that the Fed might engage in fewer rate hikes.

June’s solid job growth followed a tepid gain of 72,000 jobs in May, a result that had fueled concerns about the economy’s health. But with June’s pace of hiring, employers have now added, on average, a solid 171,000 jobs for the past three months. Last month’s burst of hiring suggests that many employers have shrugged off concerns about weaker growth, President Donald Trump’s trade wars and the waning benefits from U.S. tax cuts.

US, Employers, Hiring
A worker helps build a 2020 Ford Explorer car at Ford’s Chicago Assembly Plant, July 5, 2019. VOA

`Although there are drags on the economy in 2019, the expansion should continue through this year,” said Gus Faucher, chief economist at PNC Financial Services. “The doom and gloom was overblown.”

The unemployment rate ticked up to 3.7% in June from 3.6% for the previous two months, reflecting an influx of people seeking jobs. Average hourly wages rose 3.1% from a year ago.

Trump responded to Friday’s jobs report by tweeting, “JOBS, JOBS, JOBS!” But the strong hiring gains have lessened the case, at least for now, for the Fed to slash rates as Trump has repeatedly and aggressively pressed the central bank to do.

“If we had a Fed that would lower interest rates, we’d be like a rocket ship,” the president asserted to reporters in an appearance Friday. “But we’re paying a lot of interest, and it’s unnecessary. But we don’t have a Fed that knows what they’re doing.”

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Last year, Fed officials raised rates four times, in part to stave off the risk of high inflation and in part to try to ensure that they would have room to cut rates if the economy stumbled.

On Friday, the Fed reiterated that it would act as necessary sustain the economic expansion, while noting that most Fed officials have lowered their expectations for the course of rates. The Fed’s statement came in its semiannual report on monetary policy.

Broad gains

In Friday’s jobs report for June, the hiring gains were broad. Construction companies added 21,000 workers after having increased their payrolls by only 5,000 in May. Manufacturers hired 17,000, up from just 3,000 in May. Health care and social assistance added 50,500 jobs. Hiring by transportation and warehousing companies increased 23,900.

US, Employers, Hiring
FILE – Federal Reserve Board Chair Jerome Powell speaks at a news conference following a meeting of the Federal Open Market Committee, May 1, 2019, in Washington. VOA

The government sector was a major source of hiring, adding 33,000 jobs in June. Nearly all those gains were at the local level.

For Todd Leff, CEO of Hand & Stone Massage and Facial Spa, the resilience of the U.S. job market has provided both an opportunity and a challenge. With more Americans earning steady paychecks, demand for massages and facials has increased, and the company plans to add 60 locations this year and roughly 1,800 jobs. But the low unemployment rate has also made it hard to find and retain workers.

“We could hire 1,000 more employees today — if they were available,” said Leff, whose company has about 430 locations and is based in Trevose, Pa.

Investors have been turning their attention to the Fed, which has expressed concern about threats to the economy, especially the uncertainties from Trump’s trade wars, and about inflation remaining persistently below its 2% target level. A Fed rate cut, whenever it happens, would be its first in more than a decade.

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Joshua Shapiro, chief U.S. economist for the consultancy MFR, said the likelihood of a Fed rate cut late this month is now slightly lower, though he still estimates that the federal funds rate — what banks charge each other — will be sharply lower by the end of next year.

Ryan Wang, U.S. economist at HSBC Bank, suggested that the solid jobs report might create a communications challenge for Fed Chairman Jerome Powell when he testifies next week to congressional committees.

The financial markets still foresee a rate cut of 25 basis points this month, Wang said, adding, “It will be important to see if Chair Powell lays out on a strong case for near-term monetary easing in his testimony next week.”

The sluggish pace of hiring in May had signaled that employers might have grown more cautious because of global economic weakness and, perhaps, some difficulty in finding enough qualified workers at the wages that companies are willing to pay.

Slower pace

The pace of the overall economy is widely thought to be slowing from annual growth that neared a healthy 3% last year. Consumer spending has solidified. Home sales are rebounding. But America’s manufacturing sector is weakening along with construction spending. Growth in the services sector, which includes such varied industries as restaurants, finance and recreation, slowed in June.

Overall, though, employers have been adding jobs faster than new workers are flowing into the economy. That suggests that the unemployment rate will remain near its five-decade low and that the economy will keep growing, even if only modestly. (VOA)

Next Story

Fatal Drug Overdoses Decline in US; First Drop in Two Decades

The trend was driven by a steep decline in deaths linked to prescription painkillers

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FILE - A billboard advertising treatment for opioid addiction stands in Dickson, Tenn., June 7, 2017. VOA

Fatal drug overdoses in the U.S. declined by 5.1 percent in 2018, according to preliminary official data released Wednesday, the first drop in two decades. The trend was driven by a steep decline in deaths linked to prescription painkillers.

“The latest provisional data on overdose deaths show that America’s united efforts to curb opioid use disorder and addiction are working,” Health and Human Services Secretary Alex Azar said, though he cautioned the epidemic would not be stopped overnight.

The total number of estimated deaths dropped to 68,557 in 2018 against 72,224 the year before, according to the figures released by the Centers for Disease Control and Prevention.

But that number is still far higher than the 16,849 overdose deaths in 1999, a figure that rose every year until 2017, with a particularly sharp increase seen from 2014 to 2017.

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Laura Levine prepares to dispense drugs at Vocal NY, an organization that works with addicts, where she is the health educator and coordinator for the opioid reversal drug Narcan, in the Brooklyn borough of New York, March 15, 2019. VOA

Deaths attributed to natural and semisynthetic opioids, such as morphine, codeine, oxycodone, hydrocodone, hydromorphone and oxymorphone, which are prescribed as painkillers, saw a drop from 14,926 to 12,757, or 14.5 percent.

That was the steepest drop for any category of drug, though deaths linked to synthetic opioids excluding methadone (drugs like tramadol and fentanyl) continued to rise sharply, while cocaine deaths also increased slightly.

Overprescription

The U.S. opioid epidemic is rooted in decades of overprescription of addictive painkillers. The crisis is responsible for about 400,000 deaths involving prescription or illicit opioids, including high-profile victims such as pop icon Prince and rocker Tom Petty.

But there are some signs the tide is beginning to turn.

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Bottles of several opioid based medication at a pharmacy in Portsmouth, Ohio, June 21, 2017. VOA

In recent months, federal and state authorities have taken on drug giants in court for allegedly bribing doctors to prescribe their medicines or for deceptive marketing that downplayed the risks of addiction.

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The overall opioid prescribing rate peaked in 2012 at 81 prescriptions for every 100 Americans and had dropped to 58 by 2017, according to data suggesting that health care providers have become more cautious.

But the amount of opioids prescribed per person is still around three times higher than it was in 1999, according to the CDC, which uses a unit called morphine milligram equivalents (MME) to account for differences in drug type and strength. (VOA)