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The economy created 287,000 jobs in June, a substantial jump from the newly revised May figure of 11,000. These jobs were concentrated in the private service-providing sector, plus an increase of 22,000 government workers. The number of Americans working part-time for economic reasons declined by over half a million, and earnings rose. Although the unemployment rate rose from 4.7 percent to 4.9 percent, part of this increase was caused by workers reentering the labor force. The closely watched labor force participation rate rose to 62.7 percent from 62.6 percent in May.
Overall, it was an excellent month for the labor market. But this is not a sign that companies have shrugged off the Brexit vote. The survey on which the jobs report was based was taken during the week of June 12, before the referendum, so Brexit had no effect on companies’ hiring.
The big question is whether these positive numbers will encourage the Fed to raise interest rates later this year. The Fed has been watching economic conditions closely, using every excuse to delay a rise. If these conditions hold, it will be difficult to justify keeping rates so low.
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Diana Furchtgott-Roth is a senior fellow and director of Economics21 at the Manhattan Institute. Follow him on Twitter here.