Bloomberg News
WASHINGTON - The U.S. unemployment rate fell to 4% in June, but businesses added fewer jobs than had been expected, Labor Department figures showed.
The unemployment rate was 4.1% in May and 3.9% in April, a 30-year low. Businesses added 206,000 jobs in June after losing 165,000 a month earlier. Government jobs fell as temporary employees hired for the 2000 Census completed their work, holding down the overall job gain for the month to 11,000.
Manufacturing, construction, and retail jobs barely increased after declines in May, when overall job growth totaled 171,000 - most of whom were Census workers. Analysts expected a payroll gain of 250,000 in June.
This year businesses have added an average of 177,000 jobs a month, compared with 202,000 a month during 1999, the Labor Department said.
The jobs numbers "provide hard evidence that the Federal Reserve's yearlong interest rate-increasing actions to curb economic growth were having an effect," said Kenneth Mayland, president of Clear View Economics of Pepper Pike, Ohio.
Treasury securities rose following the report. This suggests Fed policymakers may refrain from raising interest rates at their Aug. 22 meeting. "It does point in that direction," said Martin Mauro, an economist at Merrill Lynch & Co. The Fed's Open Market Committee has raised the overnight bank lending rate six times since June of last year.
The Labor Department also reported that workers' average hourly earnings rose 0.4%, or 5 cents during June. That followed a 0.1% gain in May. Labor expenses represent about two-thirds of the cost of doing business.
Before Friday's report analysts had expected a 4% unemployment rate during June and a 0.4% increase in average hourly earnings, according to a survey.
Services employment fell 2,000 in June after rising 209,000 in May. The decline reflected a drop of 195,000 in government jobs. Construction employment rose 3,000 jobs last month after dropping 24,000 a month earlier.
