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Thursday, July 3, 2014

Job Growth Surged in June and Unemployment Rate Dropped to 6.1%

Total nonfarm payroll employment rose by 288,000 jobs in June and the unemployment rate dropped to 6.1%, according to the U.S. Bureau of Labor Statistics. June’s report included upward revisions to April and May’s headline number, notably bringing April’s total job gains over 300,000. Last month the economy regained all the jobs lost from the recession, however the economy has yet to fully recover when accounting for population growth.



“While the jobs report is very positive, it will not materially change the timing of the Fed’s tapering this year or the interest rate increases, which we believe will begin the middle of next year,” said ABA Chief Economist Jim Chessen.



The private sector, particularly the services industry, continues to drive job growth. The services sector alone added 262,000 jobs, more than the total jobs added the month prior and the fastest pace since February 2013. Gains in the service sector were broad based. Professional and business services lead the growth with a 67,000 job gain.

The goods producing sector, while above last month’s pace, is below the average from the end of last year. Government employment increased by 26,000, a sizeable increase given no improvement the month prior. However, the growth may be a one-time shock, because gains were driven by a 18,000 increase in public education, likely due to the extended school year.

The unemployment rate dropped to 6.1% and the labor force participation rate remained the same, signaling that the job gains were real. Moreover, the number of long term unemployed, defined as those who have been out of work for over 26 weeks, declined by 293,000 people.

Despite the positive report, 275,000 people in June became part time for economic reasons, signaling that there is still a mismatch between job seekers and employers. While the type of jobs lost in the nation and across the region were middle-skill jobs, the types of jobs that have been recovered are typically higher-skilled jobs and lower-skilled jobs, illustrating a decades-long trend of job polarization.

Read the BLS report.

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