Resilient construction boosts US employment

Resilient construction boosts US employment
By Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: July 6 2007 14:30 | Last updated: July 6 2007 14:30



US employers created more jobs than expected last month as the unemployment rate held steady close to a six-year low, according to fresh government figures.

The Department of Labor said on Friday that payrolls swelled by 132,000 in June, while estimates for hiring during the previous two months were also revised up by 75,000.

Steady job creation has underpinned recent US economic growth and the latest figures make it less likely the Federal Reserve will alter its outlook for the economy or consider cutting interest rates.

Treasuries bonds fell sharply as investors priced in a lower likelihood of a cut in rates, pushing the benchmark 10-year note to its biggest weekly decline in one year.

Wall Street economists were surprised by continued hiring in the construction sector as housebuilders hired 12,000 workers despite a prolonged housing market slump. There was further weakness in the retail sector as stores cut 24,000 positions.

Economists at Capital Economics said the decline in retail jobs “suggests that higher gasoline prices are now beginning to have a more marked negative impact on consumer spending”.

They added that the positive signal from the employment report was weakened slightly by the large share of hiring by state and local governments, which added 40,000 staff and are not viewed as good indicators of economic activity.

The bulk of the hiring was in the service industries, as banks, insurance companies, and restaurants, added 135,000 workers last month after hiring 199,000 more workers in May.