Brisk Job Growth Highlights Employment Report

A very healthy employment report that shows brisk growth and also a movement into the workforce is headlined by a stronger-than-expected 213,000 rise in nonfarm payrolls for June which just tops Econoday's consensus range. A sharp rise in the number of unemployed actively looking for a job, to 6.564 million from 6.065 million in May, lifted the unemployment rate 2 tenths to 4.0 percent and also lifted the participation rate 2 tenths to 62.9 percent.

More people looking for work is not a risk for wage inflation as average hourly earnings rose only 0.2 percent on the month and held unchanged on the year at 2.7 percent. Both of these results are at the bottom of the consensus range. Hours data are mixed with the workweek for all employees unchanged at 34.5 hours but with manufacturing showing a bounce back following a May disruption in the auto sector.

The payroll breakdown is headlined by manufacturing which surged 36,000 to double Econoday's high estimate. Construction added a sizable 13,000 with mining once again higher, up 5,000. Business is bustling and companies are turning to outside contractors with professional & business services up 50,000 and within this temporary help up 9,000, both strong gains. Showing declines, however, are trade & transportation, offering evidence that truckers are hard to find, and also a 22,000 setback for retail which had popped higher in May.

The rise in the number of people looking for a job is very good news, indicating that discouraged workers are more confident in their prospects. And very importantly, this gives FOMC members some breathing room as it reduces wage pressures and underscores Jerome Powell's stated desire to bring more people into the workforce.