195,000 new jobs in US as economy hits enviable bounce back
Published 06/07/2013 | 05:00
THE number of people at work in the US roared ahead in June, indicating the US economy is poised for faster growth as it shakes off the impact of tax increases and budget cuts.
It is the latest sign that the world's biggest economy is in the midst of a recovery while Europe remains in the economic doldrums with unemployment at a record high.
In the US, payroll figures rose by 195,000 workers for a second month, the Labor Department reported in Washington, exceeding the 165,000 gain projected by economists in a Bloomberg survey. The jobless rate stayed at 7.6pc, however, but that is close to a four-year low.
Average hourly earnings for the year ended in June advanced by the most since July 2011, giving Americans already buoyed by higher home prices more reason to boost household spending.
Such spending accounts for 70pc of the US economy. Stocks climbed, while the yield on the Treasury 10-year note rose to the highest in two years on expectations the Fed will soon start trimming $85bn (€66bn) in monthly bond purchases.
"Job growth is starting to hum along," said Jonathan Basile, director of US economics at Credit Suisse in New York.
"All of it is laying the groundwork for more spending and more jobs. This virtuous cycle is really taking hold for the second half of the year."
Retailers, professional and business services, healthcare, and leisure and hospitality businesses led the gains in June.
New cars and trucks sold in June at the fastest pace since 2007 as American drivers replaced aging vehicles and a rebound in housing construction moved trucks off dealer lots.
That helped new car sales beat estimates last month, giving a lift to General Motors and Ford. Brisk sales are boosting hiring at dealerships.
Other manufacturers aren't doing as well as the recovery struggles against crosscurrents.
Some Americans are still feeling the effects of a two percentage-point increase in the payroll tax that took effect in January and growth is being restrained by weakness overseas and federal budget cuts that began in March.