June jobs report: U.S. economy adds 195,000 new jobs

In a jobs report that surpassed expectations, the U.S. economy added 195,000 new jobs in June, according to preliminary data from the U.S. Department of Labor, and the official unemployment rate remained at 7.6% because more people entered the labor market.

In addition, revised data for April and May indicated that employers added 70,000 more new jobs than first reported in those two months, including 50,000 more in April.

In the private sector, employers added 202,000 new jobs in June, while budget cuts helped drop government positions by 7,000.

Average hourly earnings rose by 10 cents in June and by 51 cents, or 2.2%, over the past year.

Among economic sectors, employment gains were seen in leisure and hospitality (+75,000), professional and business services (+53,000), retail trade (+37,000), and financial activities (+17,000). The gains in financial services are more than double their prior 12-month average.

Slowed by a decline in exports due to weakness in the global economy, the manufacturing workforce shrunk by 6,000 jobs. That figure was somewhat surprising after the June purchasing manager’s index, or PMI, had ticked up to 50.9%, or 1.9% higher than the May reading.

Over the past year, U.S. employers have added an average of 182,000 new jobs per month. Economists say the U.S. economy must create at least 150,000 new jobs each month just to keep up with changes in population and the labor market, and it must create about 250,000 to quickly bring down the unemployment rate.

Employment data are being closely watched by the Federal Reserve Board, which has set an unemployment rate of 6.5% as the level at which it might begin to unwind its easy-money stimulation of the economy and gradually increase interest rates.

There was one other downside to June’s report. The U-6 unemployment rate, a broader measure of unemployment, rose from 13.8% to 14.3%, due to a larger number of part-time workers. The U-6 measure includes discouraged workers and part-time workers who cannot find full-time employment, and some believe the Affordable Care Act’s employer mandate, which has been delayed for a year, is contributing to the increase in part-time workers. Under the mandate, companies with 50 or more employees (full-time equivalency) must provide health insurance coverage to their workers or pay a fine.