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U.S. economy adds 195K jobs; unemployment rate steady

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U.S. employers added a robust 195,000 jobs in June and many more in April and May than previously thought. The job growth suggests a stronger economy and makes it more likely the Federal Reserve will slow its bond purchases before year's end.

The unemployment rate remained 7.6 percent because more people started looking for jobs—a healthy sign—and some didn't find them. The government doesn't count people as unemployed unless they're looking for work.

Still, hiring "continues to look more than strong enough to keep unemployment trending down ... and probably more than strong enough to lead to Fed tapering starting in September," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

The Fed's bond purchases have kept borrowing rates low to encourage borrowing and spending. A pullback in its bond buying would likely send rates up.
Pay rose sharply last month, the Labor Department's monthly jobs report Friday showed. Pay has now outpaced inflation over the past year.

Stocks opened sharply higher before erasing nearly all their gains by midmorning. And the yield on the 10-year Treasury note jumped from 2.56 percent to 2.69 percent, its highest level since August 2011. That's a sign that investors think the economy is improving.

The economy has added an average 202,000 jobs a month for the past six months, up from 180,000 in the previous six. Hiring and consumer confidence have risen despite higher taxes and federal spending cuts that kicked in this year.

Friday's report showed the economy added 70,000 more jobs in April and May than the government had previously estimated—50,000 in April and 20,000 in May. Average hourly pay rose 10 cents to $24.01, 2.2 percent higher than a year ago.

The hotels, restaurants and entertainment industry added 75,000 jobs last month. Retailers added 37,000.

The health care industry added 20,000, construction 13,000. Temporary jobs rose 10,000. But manufacturing shed 6,000.

Many of the new jobs were part time. The number of Americans who said they were working part time but would prefer full-time work jumped 322,000 to 8.2 million—the most in eight months.

The unemployment rate is derived from a survey of households, which found that 177,000 more people started looking for jobs in June. Most found them. The increase suggests that Americans think their job prospects have brightened.

But because some of the job seekers didn't find work right away, the number of unemployed was largely unchanged at 11.8 million.

The 195,000 job gain for June is calculated from a separate survey of employers.

The percentage of Americans either working or actively searching for work is known as the "labor force participation rate." The participation rate has risen for two straight months to 63.5 percent.

Still, the rate has been generally declining since peaking at 67.3 percent in 2000. That's partly the result of baby boomers retiring and dropping out of the workforce.

Despite the solid pace of hiring in June, the economy is growing only sluggishly. It expanded at a 1.8 percent annual rate in the January-March quarter. Most analysts expect growth at roughly the same subpar rate in the April-June quarter.

Weak economies overseas cut demand for U.S. exports in May. That led some economists to predict that growth in the second quarter might be slower than forecast.

Still, many areas of the economy are improving. The Fed's low-rate policies have led more Americans to buy homes and cars. They also helped boost stock and home prices in the first half of the year, increasing wealth and lifting consumers' confidence to its highest level in 5½ years.

Auto sales in the January-June period topped 7.8 million, their best first half since 2007, according to Autodata Corp. and Ward's AutoInfoBank. Sales of previously occupied homes exceeded 5 million in May, the first time that's happened since November 2009. New-home sales rose at their fastest pace in five years.

Though fewer exports have hurt manufacturing, factories fielded more orders in May. And a measure of business investment rose for a third straight month.

Diane Swonk, chief economist at Mesirow Financial, said she thinks the improving job market will lead the Fed to taper its bond purchases starting in September.

She predicts the Fed will announce that it will reduce its monthly purchases from $85 billion to $65 billion and by an additional $20 billion in December.

Swonk said she thinks the Fed will end its bond buying altogether in the second half of 2014.
 

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  1. Socialized medicine works great for white people in Scandanavia. It works well in Costa Rica for a population that is partly white and partly mestizo. I don't really see Obamacare as something aimed against whites. I think that is a Republican canard designed to elicit support from white people for republican candidates who don't care about them any more than democrats care about the non-whites they pander to with their phony maneuvers. But what is different between Costa Rica nd the Scandanavian nations on one hand and the US on the other? SIZE. Maybe the US is just too damn big. Maybe it just needs to be divided into smaller self governing pieces like when the old Holy Roman Empire was dismantled. Maybe we are always trying the same set of solutions for different kinds of people as if we were all the same. Oh-- I know-- that is liberal dogma, that we are all the same. Which is the most idiotic American notion going right back to the propaganda of 1776. All men are different and their differences are myriad and that which is different is not equal. The state which pretends men are all the same is going to force men to be the same. That is what America does here, that is what we do in our stupid overseas wars, that is how we destroy true diversity and true difference, and we are all as different groups of folks, feeling the pains of how capitalism is grinding us down into equally insignificant proletarian microconsumers with no other identity whether we like it or not. And the Marxists had this much right about the War of Independence: it was fundamentally a war of capitalist against feudal systems. America has been about big money since day one and whatever gets in the way is crushed. Health care is just another market and Obamacare, to the extent that it Rationalizes and makes more uniform a market which should actually be really different in nature and delivery from place to place-- well that will serve the interests of the biggest capitalist stakeholders in health care which is not Walmart for Gosh Sakes it is the INSURANCE INDUSTRY. CUI BONO Obamacare? The insurance industry. So republicans drop the delusion pro capitalist scales from your eyes this has almost nothing to do with race or "socialism" it has to do mostly with what the INSURANCE INDUSTRY wants to have happen in order to make their lives and profits easier.

  2. Read the article - the reason they can't justify staying is they have too many medicare/medicaid patients and the re-imbursements for transporting these patient is so low.

  3. I would not vote for Bayh if he did run. I also wouldn't vote for Pence. My guess is that Bayh does not have the stomach to oppose persons on the far left or far right. Also, outside of capitalizing on his time as U. S. Senator (and his wife's time as a board member to several companies) I don't know if he is willing to fight for anything. If people who claim to be in the middle walk away from fights with the right and left wing, what are we left with? Extremes. It's probably best for Bayh if he does not have the stomach for the fight but the result is no middle ground.

  4. JK - I meant that the results don't ring true. I also questioned the 10-year-old study because so much in the "health care system" has changed since the study was made. Moreover, it was hard to get to any overall conclusion or observation with the article. But....don't be defensive given my comments; I still think you do the best job of any journalist in the area shedding light and insight on important health care issues.

  5. Probably a good idea he doesn't run. I for one do not want someone who lives in VIRGINIA to be the governor. He gave it some thought, but he likes Virginia too much. What a name I cannot say on this site! The way these people think and operate amuses me.

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