US economy adds 224,000 jobs in June after sluggish May

WASHINGTON — 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 jobs report the Labor Department 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.

Indeed, the initial reaction in the financial markets suggested increased uncertainty about Fed rate cuts. Stock index futures fell and bond yields rose sharply.

June’s solid job growth followed a tepid gain of 72,000 jobs in May, a result that had fueled concerns about the economy. But with June’s gain, employers have 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 global growth, President Donald Trump’s trade wars and the waning benefits from U.S. tax cuts.

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 who were initially counted as unemployed. Average hourly wages rose 3.1% from a year ago.

The job gains in June 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.

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

Immigrants were a key source of workers added over the past year. They accounted for roughly 37% of the job gains; native-born residents made up 63%.

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.

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.

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.