Jobless Rate Falls to 4.0 Percent
Friday, July 7th 2000, 12:00 am
By: News On 6
WASHINGTON (AP) â€” The nation's unemployment rate ticked down a notch to 4 percent in June as private employers added 206,000 jobs after cutting positions the month before.
The Labor Department reported Friday that the jobless rate fell by 0.1 percentage points from 4.1 percent in May â€” right on target with many analysts' expectations. In April, the unemployment rate hit a 30-year low of 3.9 percent.
Total employment including government workers rose by only 11,000 in June as 190,000 temporary workers finished work on the census and left their jobs. That was the weakest growth in four years.
However, private employers added 206,000 positions during the month, fewer jobs than many analysts expected.
On Wall Street, bond prices surged on the news. Prices on the benchmark 10-year Treasury notes rose as yields fell to 5.97 percent from 6.04 percent late Thursday. Prices on 30-year Treasury bonds also rose as yields fell to 5.86 percent from 5.90 percent from Thursday.
``This is hard evidence that the economy is slowing,'' said economist Ken Mayland of ClearView Economics. Looking at both the May and June figures, job growth is moderating, he said. ``This gives the Fed the luxury of leaving interest rates alone in August and letting previous rate hikes unfold.''
Average hourly earnings, a key gauge of inflation pressures, rose 0.4 in June to $13.71. Many analysts were expecting a 0.3 percent gain. In May, wages grew by a slim 0.1 percent.
While job and wage growth is good for workers, economists worry that a too-strong combination might worsen inflation. Their fear: employers scrambling to find scarce workers, recruit them with big boosts in wages and benefits, added costs that could be passed along to consumers as higher prices.
The Federal Reserve has boosted interest rates six times over the last year to slow the economy and keep inflation under control. A number of economic reports, including new home sales and retail sales, have suggested that the Fed's interest rate increases are working to slow economic growth.
The rate increases are designed to make borrowing more expensive and cool demand for big-ticket items such as homes and cars. The Fed meets next to discuss interest rate policy on Aug. 22.
In May, total payrolls rose by 171,000, weaker growth than the government previously estimated. But all that strength came in government hiring of temporary workers to conduct the census. American businesses, however, cut 165,000 jobs that month, more than the government estimated one month ago.
The increase in June's private payroll jobs reflected a mixed picture.
The service sector, normally the driving force behind job creation in the United States, lost 2,000 jobs, the weakest performance since January 1996 when a blizzard hit the East Coast.
Retailers, however, added 49,000 jobs with much of the gain coming from hiring at bars and restaurants.
Construction companies added 3,000 jobs and factories created 8,000 new positions.