US economy adds 195K jobs; unemployment 7.6 pct.

Published on NewsOK Modified: July 5, 2013 at 12:59 pm •  Published: July 5, 2013
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WASHINGTON (AP) — U.S. employers added a robust 195,000 jobs in June and many more in April and May than previously thought. The job growth suggests a stronger economy and makes it more likely the Federal Reserve will slow its bond purchases as early as September.

The unemployment rate remained 7.6 percent because more people started looking for jobs — a healthy sign — and some didn't find them. The government doesn't count people as unemployed unless they're looking for work.

The U.S. job market is showing surprising resilience in the face of tax increases, federal spending cuts and economic weakness overseas. Employers have added an average 202,000 jobs for the past six months, up from 180,000 in the previous six.

June's job gain was fueled by consumer spending and the housing recovery. Consumer confidence has reached a 5½ year high and is driving up sales of homes and cars. Hiring was especially strong in June among retailers, hotels, restaurants, construction companies and financial services firms.

"The numbers that we're seeing are more sustainable than we thought," said Paul Edelstein, U.S. economist at IHS Global Insight, a forecasting firm. "We're seeing better job numbers, the stock market is increasing and home prices are rising."

Pay also rose sharply last month and is outpacing inflation, the Labor Department's monthly jobs report Friday showed. Average hourly pay rose 10 cents in June to $24.01. Over the past 12 months, it's risen 2.2 percent. Over the same period, consumer prices have increased 1.4 percent.

Stocks rose sharply in early afternoon trading. The Dow Jones industrial average was up 94 points. And the yield on the 10-year Treasury note jumped from 2.56 percent to 2.71 percent, its highest level since August 2011. That's a sign that investors think the economy is improving.

Friday's report showed the economy added 70,000 more jobs in April and May than the government had previously estimated — 50,000 in April and 20,000 in May.

Further job growth could lower the unemployment rate and help the economy rebound after a weak start this year. If so, the Fed would likely scale back its bond purchases later this year.

The Fed has been buying $85 billion worth of Treasury and mortgage bonds a month since late last year. The purchases pushed long-term rates to historic lows, fueled a record-breaking stock market rally and encouraged consumers and businesses to borrow and spend. They've also helped support an economy that's had to absorb federal spending cuts and a Social Security tax increase that's shrunk consumer paychecks this year.

John Silvia, chief economist at Wells Fargo, said he thinks the Fed will announce at its September policy meeting that it will reduce its monthly bond purchases, perhaps from $85 billion a month to $75 billion.

Chairman Ben Bernanke has said the bond buying could end around the time unemployment reaches 7 percent. The Fed foresees that happening around mid-2014.

Friday's report contained at least one element of concern: Many of the job gains were in generally lower-paying industries, a trend that emerged earlier this year. The hotels, restaurants and entertainment industry added 75,000 jobs in June. This industry has added an average of 55,000 jobs a month this year, nearly double its 30,000 average in 2012. Retailers added 37,000. Temporary jobs rose 10,000.