As Jobs Surge, Hurdles Linger--Update
By Jonathan House and Eric Morath
The U.S. economic expansion is entering its sixth year with the best stretch of job growth in almost a decade. Beneath the shiny exterior, however, lurk soft patches that worry economists and policy makers.
Investors on Thursday seized on robust jobs numbers--not lingering soft spots--and drove the Dow Jones Industrial Average past 17000 for the first time. The Dow closed up 92.02 points, or 0.5%, at 17069.26 in holiday-shortened trading.
Overall job growth in June showed businesses gaining confidence and shedding the caution that has defined the labor market in the five years since the recession ended. Employers added 288,000 jobs during the month and unemployment fell to 6.1%, the lowest level since September 2008, the Labor Department said Thursday, pushing the rate closer to what many economists consider full employment.
Yet those gauges don't capture other weaknesses in the employment spectrum. Nor do those figures explain the mysteries of an economy that has been struggling to gain enough velocity to shake off its many ailments long after the recession ended.
Consumer spending remains weak, a consequence of a labor market delivering new jobs but skimpy wage growth. And the share of Americans working or looking for work--the so-called labor-force participation rate--is near its lowest levels since the late 1970s, despite steady hiring.
PMW Technologies Inc., a supplier of human-resources software called PeopleMatter, highlights the divide in the economy. The Charleston, S.C., firm has added 50 higher-paid software engineers and salespeople over the past year, boosting the company's benefits package to attract and retain high-skilled workers. It plans to add 100 positions over the next year, bringing its total head count to 250.
Yet the company is witnessing the choppiness among its clients in the retail and food-services sectors. "The economy's very fragile," said Chief Executive Nate DaPore. "We're in a muddle-through economy."
The nature of the latest labor-market gains presents a challenge for Federal Reserve officials: Improvement in top-line metrics such as unemployment and inflation, both of which are nearing the central bank's targets, is spurring speculation about earlier-than-expected rate increases even though gauges under the surface show the recovery remains soft.