Job growth leaped higher in June as businesses looked to keep up with a rapidly recovering U.S. economy, the Labor Department reported Friday.
Nonfarm payrolls increased 850,000 for the month, compared to the Dow Jones estimate of 706,000 and better than the upwardly revised 583,000 in May. The unemployment rate, however, rose to 5.9% against the 5.6% expectation.
The jobless rate increase came even though the labor force participation rate was unchanged at 61.6%. A separate figure that accounts for discouraged workers and those holding part-time jobs for economic reasons fell sharply to 9.8%, with the 0.4 percentage point decline putting the so-called real unemployment rate below 10% for the first time since March 2020.
Hiring accelerated as the second quarter morphed into a summer that will see a closer to return to normal for Americans held captive for the past year due to the pandemic-related restrictions.
As the data continues to point higher, economists are looking for GDP growth in the second quarter to approach 10%, a stunning continuation of a rebound helped by vaccines that have sharply reduced Covid-19 case rates along with hospitalizations and deaths.
Hospitality continued to be the prime beneficiary of the reopening as workers returned to jobs at bars, restaurants, hotels and the like.
The industry notched a gain of 340,000 amid easing restrictions across the country. That total included 194,000 in bars and restaurants, but still left the sector 2.2 million shy of where it was in February 2020 before the pandemic began.
Other notable gains came in education, which totaled 269,000 across state, local and private hiring, while professional and business services increased by 72,000 and retail added 67,000.
The other services industry added 56,000 jobs, including a gain of 29,000 in personal and laundry services, a subsector that has been seen as a proxy for the resumption of normal business activity. Social assistance added 32,000, while wholesale trade contributed 21,000 to the total and mining grew by 10,000.
Manufacturing edged up 15,000 for the month, though construction lost 7,000 positions despite a sizzling housing industry where new building has been held back by supply shortages and what had been soaring lumber prices before the recent plunge.
Amid the rise in total employment, wage gains also accelerated.
Average hourly earnings increased 0.33% for the month and 3.6% year over year, both matching Dow Jones estimates.
Aggregate wage growth had been distorted through much of the pandemic as lower-earnings workers in high-contact industries like hospitality remained sidelined. The June gain puts the jobs market ahead of its previous pace; average hourly earnings rose 3% in February 2020 year over year at a time when lower-earning workers finally had been seeing gains after a generation of stagnant paychecks.
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