Unemployment Rate slumps to 6.1% in US, 288,000 jobs added in June

A Labor Department report, released on Thursday, showed that the employers in the United States maximized their hiring and added a hearty 288,000 jobs in June, the fifth straight monthly job gain above 200,000. The accelerated rate of hiring in return brought the unemployment rate to 6.1 percent, the lowest since September 2008.

June’s job gain is the best such stretch since the late 1990s tech boom. According to the experts, the economy has added nearly 2.5 million jobs in the past 12 months. It means an average of 208,000 jobs added every month, the fastest year-over-year pace since 2006.

The Labor Department jobs report gave a clear indication that the U.S. economy is moving steadily upward after having shrunk at the start of the year.

The investors also looked pleased by the news of job growth. The stock markets also witnessed an upward trend on Thursday. An hour after the government released the jobs report, the Dow Jones industrial average traded above 17,000 for first time. The Dow was up about 90 points by early afternoon. The Broader stock averages also gained remarkably.

Wages still a concern

Even if the employment rate gone up remarkably, wages remain a grave concern. The wages still have to rise significantly despite an economic recovery now entering its sixth year. According to the analysts, the falling unemployment rate should cause pay to rise more sharply.

What experts say?

According to the economists, the stable employment growth should assist in purchases of goods from Asia and Europe. Besides, this should also help in boosting their economies. It is noteworthy most of Europe is witnessing high unemployment.

Reactions

Stuart Hoffman, chief economist at PNC Financial Services: If we have some momentum going into the second half of the year, it helps the world economy because we’re big consumers.

Patrick O’Keefe, director of economic research at the consultancy CohnReznick: Since February, this has now become a textbook jobs expansion. It is both broad and accelerating.

Steven Ricchiuto, chief economist at Mizuho Securities: At the end of the day you can’t get consumer spending unless you have income growth. I believe the data means the 10-year Treasury yield won’t be able to push through its recent trading ceiling of 2.75 percent in the near-term.

Richard Gilhooly, U.S. director of interest-rate strategy at TD Securities:  The dip buyers are in after the data and while we have followed this thought process over the last four employment reports, looking for the sell-off into payrolls and yield highs shortly after the actual print, we do think this time is different. Technically and fundamentally, we expect yields to start a gapping process higher over coming weeks and months, led by the 2-3 year sector where we think the biggest carry and roll-down trade is positioned.

Dan Mulholland, head of U.S. Treasury trading at BNY Mellon Capital Markets LLC: The correlation has been “loose” between the ADP and NFP reports. The latter include hiring from both the private and public sectors. If Thursday’s report showed 300,000 jobs growth, Treasury bonds would sell off more and the 10-year yield would climb above 2.7 percent.

Jacob Oubina, senior US economist at RBC Capital Markets in New York: It’s an extremely bullish report. It’s a report that really checks off all the positive boxes. I don’t think you could have asked for a stronger read.

Jason Rogan, managing director of U.S. government bond trading in New York at Guggenheim Securities LLC: There is no doubt it is a very good number and the market is now pricing in a better than expected NFP. The 24 hour window is creating a rush to sell Treasury bonds.