The economy gained 213,000 new jobs in June the Bureau of Labor Statistics reported Friday morning, more than forecasters expected.
The unemployment rate rose, to 4 percent, but for the encouraging reason that more people entered the workforce in the month.
The new data suggests that the recovery has not been slowed by the threat of a trade war or any other macroeconomic risks, and may in fact be gaining momentum. Job creation has accelerated in recent months even though it should be slowing down, considering that the recovery is, at nine years, well past the point at which other expansions have petered out.
Over the past three months, job gains have averaged 211,000 — well over twice as many as are needed to keep up with population growth.
Meanwhile, earnings grew 2.7 percent in June, near the highest levels of recent months even if short of the breakout pace officials have hoped for.
Altogether, Friday’s report provided evidence that the economic recovery has entered a new and encouraging phase by luring workers into the labor force whom some economists and officials had thought might never return to work.
“They are starting to show themselves, and they are starting to come back in,” said Cathy Barrera, chief economist for the online employment marketplace ZipRecruiter.
Yet prospects for workers are only expected to improve in the months ahead. Even before Friday’s strong report, Federal Reserve officials saw the economy as “very strong,” and Chairman Jerome Powell suggested that the labor recovery could persist beyond what was previously thought.
For its part, too, the Trump administration has set a goal of not just cutting joblessness, but also enticing more workers into the workforce by cutting taxes, lowering regulations, and overhauling public assistance programs.
Friday’s report contained good news on participation. The labor force grew in June to just under 63 percent of the population. Because the labor force is the denominator in the calculation of unemployment, the unemployment rate ticked up by 0.2 percentage points. In other words, unemployment rose to 4 percent for the “right” reasons.
The country has seen steady workforce participation for nearly five years now, defying the aging of the population that would be expected to shrink the labor pool.
The buoyancy of labor force participation is a sign that more people are entering the labor force, or at least that more workers are staying in rather than retiring or quitting — a stark comparison with earlier years of the recession, when millions of people quit the job hunt altogether out of discouragement, falling out of the calculation of the unemployment rate.
“It’s almost a stampede back into the labor market,” said White House economic adviser Kevin Hassett, speaking on Fox Business.
In recent weeks, members of Congress and Fed officials have begun worrying more about a lack of workers to fill open jobs, and less about a lack of jobs for unemployed workers. The last time the Labor Department counted, there were more advertised job openings than jobless workers, something that hasn’t been true in decades.
In some parts of the country, labor markets are running extremely hot, forcing employers to look beyond the typical hiring pool for potential workers.
In Charleston, S.C., for instance, the hospitality industry has begun reaching out to the formerly homeless and providing transportation for workers, according to local media.
In Detroit, a lack of skilled tradesman has stalled downtown construction projects, and contractors have responded by boosting apprenticeships.
The Federal Reserve revealed Thursday in minutes from its last monetary policy meeting that business contacts around the country are complaining about difficulty finding workers, and some are responding by seeking to train potential hires themselves or automating their jobs.
On the other hand, the strongest sign that the jobs recovery could still go further has been the lack of wage growth.
Businesses having trouble finding workers should be forced to offer higher wages, salaries, and benefits, in the thinking of the Fed. To increase pay while staying in business might require companies to become more efficient or to invest in labor-saving equipment. So far, those developments have been missing from the recovery.
One possible explanation is that there are in fact many people who are outside the labor force today who will be tempted to take jobs in the months ahead if businesses continue to look for unconventional candidates and gradually raise pay.
In fact, it’s only in the past year or so that the total share of the working-age population that is employed has recovered to pre-financial crisis levels. That ratio is still well below where it stood during the dot-com bubble suggesting that there is still a reserve of labor that has yet to be reached by the recovery.
Barrera suggested that measurements of overall wage growth are being held down because of rapid job creation for low-educated and low-skilled workers, which is a good development. They and others are better off, and in time that will show up in the wage statistics. “We’re impatient, but we need to be patient to see that reflected,” she said.
Manufacturers weren’t deterred by either a worker shortage or the threat of tariffs in June, according to the report’s survey of establishments. The sector added 36,000 jobs, bringing the total for the past year to 285,000.
The construction, mining, health care, and business support industries also showed strong growth.