Employment Stays the Course

Stability Suggests Economy Is Growing

The unemployment rate held steady last month at 4.5 percent and wages rose moderately, the Labor Department said yesterday, indicating that the job market remains solid despite the slumping housing market and struggling auto industry.

The figures strengthened many analysts' belief that economic growth picked up in the spring after slowing to a crawl in the first three months of the year.

The employment report "adds to the evidence that the economy bounced back in the second quarter," said Nigel Gault, U.S. economist at Global Insight.

Job growth was particularly strong, as it has been all year, in health care and education. Employers in both fields are scrambling to expand their services to meet growing demand while losing experienced workers to retirement.

Montgomery College in Maryland, for example, is on a hiring tear. It is recruiting faculty to replace retiring professors, and needs more teachers and support staff for the opening of an arts center at its Takoma Park-Silver Spring campus.

The community college hired 72 professors last academic year and has added 50 more for the coming school year, said Maria Bedenbaugh, a human resources specialist. It projects hiring to remain brisk.

"We expect the faculty recruitment to increase each year due to enrollment and faculty retiring and our growth in general," Bedenbaugh said. "We have a lot of buildings going up."

Educators and health-care providers together added 59,000 jobs last month -- nearly two of every three jobs added by private employers, the Labor Department figures showed.

Restaurants, builders and government agencies were among the employers that also added workers in June. Together, those gains more than offset job losses in retail, manufacturing and other areas.

Manufacturers cut their payrolls for a 12th consecutive month, for a total loss of 191,000 jobs. More than a third of the jobs shed during that time were among automakers and their suppliers.

All told, the Labor Department said, employers nationally added a net 132,000 workers in June, slightly below the average pace for the first six months of the year. But job growth also was stronger in April and May than previously estimated, the department said, so earlier figures were revised to add 75,000 jobs for the two months combined.

Job growth overall slowed in the first six months of this year, averaging a gain of 145,000 jobs per month so far in 2007, down from 189,000 a month in 2006.

But unemployment has stayed low, averaging 4.5 percent through the first six months of the year.

Meanwhile, average hourly earnings rose by 6 cents, to $17.38, for a gain of about 4 percent over the past year.

That's encouraging for workers, but also one more reason for the Federal Reserve to remain concerned about inflation pressure.

The Fed left short-term interest rates unchanged at its meeting last week, repeating that it expects the economy to grow moderately this year as inflation gradually declines. But central bank policymakers also emphasized their worries that price pressures could prove more stubborn, particularly with unemployment so low.

The Labor Department report strengthened many analysts' expectations that the Fed will not raise or cut interest rates for a while.

"The economy remains pretty much where the Fed wants it," said Gault, of Global Insight. With the economy gaining momentum and inflation, excluding food and energy prices, edging lower, he said, "the Fed can remain on hold for a long time."