The nation added a solid 223,000 jobs in June, according to government data released Thursday morning, but flat wages coupled with a decline in the size of the nation's workforce suggest an economy that is still well short of a full recovery.
The unemployment rate fell to 5.3 percent, the lowest mark in seven years.
The latest jobs data from the Department of Labor comes amid a spike in global economic volatility, the result of high-wire negotiations between a near-bankrupt Greece and its European creditors. Though the United States faces only modest risk from the chaos across the Atlantic, its own economy is fighting through a soft spot after an encouraging period of growth in 2014.
Markets opened slightly up Thursday morning but had flattened before noon.
For the United States, the labor market — despite more than a year of rapid hiring — still hasn’t reached the virtuous level where workers are pulled in from the sidelines, employers must increasingly compete for hires and wages rise as a result. In months like June — when the number on the sidelines swells — the path toward tighter employment and better paychecks only gets trickier.
“The economy is sending us mixed messages,” said Bill Spriggs, a chief economist at the AFL-CIO.
Some economists and experts cautioned that the labor force participation numbers from June could be muddled by complex calculations that the government uses to smooth out seasonal fluctuations. Normally in June the workforce swells with college graduates and summer workers; the Department of Labor tries to model the underlying trends, but that modeling is harder in months with such churn.
Take away the seasonal adjustments, and the labor force grew by about 550,000, less than half of what is normally seen in June. On the White House Web site, Betsey Stevenson, a member of President Obama’s Council of Economic Advisers, noted that households were polled earlier than usual this June, and some might have been asked about their employment situation before they began new jobs.
U.S. Labor Secretary Thomas E. Perez said Thursday in a phone interview that he suspected June’s numbers were an “aberration, as opposed to a more troubling trend.” Still, Perez said that the labor market has a “significant amount of slack.”
“We’re not at full employment by any stretch,” he said. “The best way to lift wages is to have tighter labor markets. We’ve had the strongest two-year job growth since the Clinton administration. The challenge for us is, we’re digging out of a much deeper hole.”
Last month wages didn’t budge and the labor force shrank by more than 400,000 workers, more than offsetting a major increase in May. The labor force participation rate — the share of people holding down jobs or seeking them — fell to 62.6 percent, the lowest point since 1977. Though some of that decline is tied to the retirement of baby boomers, prime-age individuals — between 25 and 54 years old — are also increasingly dropping out of the workforce. The prime age participation rate now stands at 80.8 percent, compared with 83.1 percent seven years ago.
Meanwhile, job growth for April and May was revised downward by a combined 60,000 positions. With the year half over, the nation is on pace to add 2.5 million jobs this year, as opposed to 3.1 million in 2014.
The headline number was roughly on par with expectations of economists.
“This jobs report is not a dud, and it’s not a sparkler,” said Mark Hamrick, an economic analyst for Bankrate.com, a personal finance Web site. “It’s somewhat in between. And it’s consistent with the two-steps-forward, one-step-back trend over the last year years. At first glance it seems terrific that the unemployment rate fell, but you look deeper and it is less than satisfying.”
Still, the nation is in better shape than it was at the start of the year, when the economy shrank 0.2 percent in the first quarter. Since then a series of indicators — retail sales, home construction and construction growth — have somewhat brightened the outlook for the year. The federal government will announce GDP growth for the period between April and June later this month.
The Federal Reserve, in debating the timing of an interest rate increase after 6½ years of easy borrowing, could be influenced by ripples from Greece’s descent into financial turmoil. Though most analysts say that contagion is unlikely to spread globally, even a downturn in Europe could trim U.S. exports and growth.
If the U.S. economy shows signs of stability, the Federal Reserve could call for an interest rate hike later this year. That would increase the cost of borrowing for consumers and companies and mark a vital test for whether the world’s largest economy is ready to stand on more normal footing. But some economists said Thursday that the latest soft wage and labor force participation numbers could push back the Fed’s timetable.
In a speech in May, Federal Reserve Chair Janet Yellen called wage growth during the recovery “generally disappointing” and said the pace “suggests that the labor market has not fully healed.”
Wage growth in June was totally flat. The average worker made $24.95 per hour, same as in May. For the year, wages have increased 2 percent, roughly in line with the average during the course of the recovery.
In June, job growth was strong both in the health care sector and the professional and business services industry. The mining sector shed another 4,000 jobs; since December, in tandem with an oil price slump, employment in mining has declined by 71,000 positions.
U.S. jobs data is normally released on the first Friday of the month, but markets will be closed this Friday because of Independence Day.