The payrolls at U.S.-based private companies increased less than expected in June at the same time that the number of people in the U.S. who filed for unemployment last week increased unexpectedly.
According to a report in Reuters, despite the unexpected increase in unemployment the labor market is considered to be near or at full employment, with the unemployment rate of 3.8 percent marking an 18-year low. So far this year the rate of unemployment has dipped three-tenths of a percentage point and is close to the Federal Reserve’s forecast of 3.6 percent unemployment by the end of 2018, noted Reuters. Reuters pointed to the ADP National Employment Report which showed that private companies hired 177,000 workers in June — fewer than the 190,000 the market was anticipating. Private payrolls increased 189,000 in May, the report noted.
According to Reuters, the unemployment rate uptick could be due to the tough time companies are having in finding qualified workers. When the government releases its employment report on Friday (July 6) Reuters said it will likely show that 195,000 jobs were added in June. That comes off of 223,000 new jobs created in May, noted Reuters. At the same time that the ADP report came out, the Labor Department released a report that shows state unemployment benefit filings increased 3,000 to 231,000 for the week ending June 30. The numbers are on a seasonally adjusted basis. Economists surveyed by Reuters had expected claims to dip to 225,000. With automobile manufacturers closing assembly lines for what Reuters said is annual retooling, unemployment claims numbers could be more volatile in the next few weeks.
In June the U.S. unemployment rate dropped to 3.8 percent amid higher-than-expected payroll gains. That decrease brings the unemployment rate to its lowest point in 18 years, Reuters reported. “It’s a good report all around, it literally checks off all the right boxes,” RBC Capital Markets Chief U.S. Economist Tom Porcelli told Reuters at the time. “We’ve just been quickly scouring through to see where the negatives are, because, inevitably, there are some negative things about a report, and honestly there’s not.” Total payrolls increased by 223,000 workers, which was more than the estimate of 188,000. And private payrolls increased by 218,000, which was above the estimate of 183,000. In addition, average hourly earnings increased 0.3 percent month-to-month compared to an estimate of 0.2 percent. However, average hourly earnings came as estimated at 2.7 percent year over year.