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US economy added 213,000 jobs in June as unemployment rose to 4 percent

A job seeker shakes hands with a representative during a National Career Fairs event in Tampa, Florida, on May 23, 2018. MUST CREDIT: Bloomberg photo by Luke Sharrett.

WASHINGTON - The U.S. economy added 213,000 jobs in June, the Labor Department reported Friday, as the unemployment rate rose to four percent.

The small increase in unemployment -- up from 3.8 percent in May -- appears to be the result of more Americans searching for work, according to Labor Department figures released Friday.

The labor force expanded by 601,000 jobs over the month, with an influx of new women and teen workers more than offsetting a dip in labor force participation among men, said Gregory Daco of Oxford Economics.

Job openings are at record highs, meaning many of the job seekers are likely to find employment soon. Many experts still predict the unemployment rate will fall further by the end of the year to the lowest level since 1969.

Despite the low unemployment and struggles to find workers, companies still appear hesitant to significantly raise pay in many industries. Average hourly earnings are 2.7 percent higher than a year ago, a lackluster pace compared to past eras of healthy job growth when wages were rising at 3.5 percent or more a year.

"It's not your father's labor market anymore," said Diane Swonk, chief economist at Grant Thornton. "Clearly there are some sectors like trucking where wages are going up, but warehousing wages really collapsed and are only now just $12 or $13 an hour."

The economy continues to show many signs of strength despite the brewing trade war. Wall Street welcomed the employment gains, sending the Standard & Poor's 500 up 0.9 percent on Friday. The Labor Department also revised its estimates for job growth in May, going from a previous estimate of 233,000 new jobs to 244,000 jobs new jobs. The department also boosted its estimate for April job growth up to 175,000 -- up from an earlier assessment of 159,000.

The United States has now added jobs for 93 straight months, a record streak of hiring. As executives say they cannot find enough qualified workers, some are turning to hiring people who are incarcerated or people with disabilities.

Job growth was widespread across the economy with solid gains in business, health care, construction and manufacturing. The only sore spot was retail, which shed 22,000 jobs as Toys R Us shut its doors.

"The key takeaway is the big jump in labor force participation," said Kevin Hassett, President Trump's top economist. "This is exactly what we wanted to see: marginalized Americans coming back into the labor force."

Hassett pointed to the increase in labor force participation for African American women and Hispanic men and women as an encouraging sign that people are being drawn back to work.

Trump frequently touts the strong jobs picture as hiring has picked up in recent months. Hispanic unemployment fell to a record low of 4.6 percent in June, and unemployment remains near record lows for African Americans and for Americans with less than a high school degree.

While economists say the tax cuts are boosting growth this year, they warn that Trump's actions on trade could have damaging impacts on the economy and jobs.

"People are worried. The trade war isn't hurting them yet, but they are concerned. We can take a little bit of a trade skirmish, but not a full-blow trade war," Swonk said. "If this doesn't stop, manufacturing will take a hit."

The United States imposed the first duties on $34 billion in Chinese goods early Friday, and China immediately retaliated with levies on an equal amount of American goods, including heartland staples like soybeans, corn, pork and poultry. The United States is now in a trade war with all its top five trading partners: China, Canada, Mexico, the European Union and Japan.

"Clients tell us all the time that they will be more cautious in this kind of environment. Even the Trump administration doesn't seem to know what's going to happen next," said Daco, of Oxford Economics. While hiring and growth still look robust, the trade war is probably starting to slow it down, Daco said.

The Federal Reserve on Thursday reported some businesses had already scaled back or postponed planned investment because of the trade struggles and warned that many more promise to do more if the spats continue to escalate. The Fed is also gradually raising interest rates, easing off the extraordinary efforts it took to stimulate the economy after the Great Recession and looking instead to ward off future spikes in inflation.

Trump and his senior team say a little pain will be worth it to get better trade terms from China, Europe and others.

"As good trade deals start to roll in, people start to understand how good this is for the economy," Hassett said Friday.

Author information: Heather Long is an economics correspondent. Before joining The Washington Post, she was a senior economics reporter at CNN and a columnist and deputy editor at the Patriot-News in Harrisburg, Pa. She also worked at an investment firm in London.

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