The unemployment rate fell, but for the wrong reason: fewer people searched for jobs. Fred Katayama reports.
The labor market weakened a bit in June. Employers added 223,000 workers to their payrolls, a slowdown from May. That was slightly less than economists had forecast. Worse, job gains of the previous two months were revised downward. The unemployment rate fell more than expected to 5.3 percent, but for the wrong reason: fewer people searched for jobs. More than 430,000 people left the labor force, and the labor force participation rate fell to its lowest level in nearly 38 years. The employment gains were broad-based. Services cranked out the most jobs, led by professional and business services, health care, and retail. Mining continued to lose jobs amid weak energy prices. Construction growth was flat, and manufacturing added few jobs. One figure closely eyed by Federal Reserve policy makers, average hourly earnings, didn't grow at all in June.The dollar edged lower on the report, andTreasury yields fell. Interest rate futures contracts rose, showing that traders see the Fed waiting until 2016 before hiking rates. But despite the soft jobs report, some economists think the Fed will still hike rates this fall. S&P's Beth Ann Bovino: SOUNDBITE: BETH ANN BOVINO, U.S. CHIEF ECONOMIST, STANDARD AND POOR'S (ENGLISH) SAYING: "I think with again another reading above 200,000 job gains, you saw wages climbing higher but slowly, disappointing there but again not turning around, reversing direction, which would be a real alarm. I think those together suggest the Fed would want to move in September." Fed policy makers next meet July 28.