Labor Department statistics released Friday show faster-than-expected job growth for the month of June, tempering fears among many that the economy may be slowing down. An estimated 222,000 jobs were added to the economy in June, a significant increase over the 152,000 added in May.
While overall job growth rebounded, small business hiring dropped off significantly in June. The national jobs index dipped to its lowest level in four years, according to the Paychex | IHS Markit Small Business Employment Watch. Economists say that tightened labor markets and uncertainty among small business owners over legislative policies are to blame for the decline.
Forecasters expected lower U.S. job growth numbers due to slowing GDP growth, a weakening dollar and abating business optimism. While the unemployment rate ticked up slightly to 4.4 percent in June from 4.3 percent in May, experts say the minor increase is a positive indicator that more workers have entered the labor force.
Hourly earnings among small business employees rose again in June, a 2.88 percent year-over-year increase. In U.S. labor markets overall, average hourly wages grew by 2.5 percent from a year earlier, reflecting mediocre wage growth in the midst of healthy job creation numbers. Wage gains are up slightly, due in part to minimum wage increases in several states and cities this year, and tightened labor markets that have employers competing harder for workers; however, median base pay is still increasing slower than inflation.
“It’s obviously good news, but it’s puzzling too when you look at an unemployment rate of 4.3 percent or 4.4 percent and couple that with a lack of wage growth,” said Philip Noftsinger, president of CBIZ Employee Services Organization. “We’re kind of searching for that mystery inflation that we’re not seeing.”