U.S. employers added 146,000 jobs in June, below Wall Street forecasts, but job growth was revised up for April and May and unemployment rate fell to its lowest point since September 2001.
The latest snapshot of the nation's jobs climate, released by the Labor Department on Friday, supported the view of Federal Reserve Chairman Alan Greenspan and his colleagues that the labor market continues to improve gradually.
June's tepid employment growth came in below analyst expectations for 188,500 new jobs in the month. But the Labor Department (search) revised up job growth in April and May to 292,000 and 104,000, respectively — boosting the two-month count by 44,000 payroll jobs.
The decline in the unemployment rate (search) to 5.0 percent was a nice surprise, since Wall Street had expected it to hold at 5.1 percent. The drop was mostly due to a paltry 1,000 increase in the work force, which includes those looking for work as well as those who have jobs.
"It all suggests that the labor market is improving a bit. But it's kind of anemic compared with what we were expecting. It really does validate the Fed's view. There is a gradual improvement in the labor market. But it is very gradual," said William Cheney, chief economist at John Hancock Financial Services.
Factory payrolls shrank for the fourth straight month as auto assembly and parts plants cut back on production. A glut of inventories has prompted many automakers to slow production lines until demand can catch up. Some 96,000 manufacturing jobs have been lost since August 2004.
While 18,000 workers were hired in the construction industry last month, most of June's employment growth came in the service sector. Professional and business services jobs rose 56,000, education and health services were up 38,000 and leisure and hospitality payrolls grew 19,000.
In a sign of underlying weakness, the length of the average workweek was 33.7 hours, unchanged from May's downwardly revised length. The factory workweek was also unchanged at 40.4 hours, while overtime held at 4.4 hours.
Employers typically increase the length of the workweek before taking on new workers, so a lack of growth in that area can mean scant hiring ahead.
Average hourly earnings rose 3 cents to $16.06 and have risen 2.7 percent over the year.