June Payrolls Surge 268,000, but Unemployment Inches Up

Further tempering the reaction, May's payroll gain was revised downward to a loss.
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The June

employment report

was stronger than expected in a couple of respects, but downward revisions to the May report -- and a slight rise in the

unemployment rate

to 4.3% from 4.2% -- are helping quell fears that the economy is growing too quickly for the

Fed's

taste.

Nonfarm payrolls

expanded by 268,000 in June, exceeding the 220,000-job gain forecast by economists surveyed by

Reuters

. The average gain over the last 12 months including June was 226,000.

Service-sector payrolls, the biggest component of the report, expanded by 280,000, also an above-trend pace. Manufacturing payrolls contracted once again, losing 35,000 jobs, marking the 10th consecutive month of manufacturing job losses.

May payrolls, however, were revised to show a loss of 5,000 jobs from the originally reported gain of 11,000, tempering the effect of the bigger-than-expected June number.

A similar pattern was on display in the wages component of the report.

Average hourly earnings

rose 0.4% in June to $13.23, a tenth more than expected. But the May gain was revised to 0.3% from 0.4%. Even so, the year-on-year rate of average hourly earnings growth rose to 3.7% from 3.5%.

The report's final main component, the

average workweek

, was in line with expectations at 34.5 hours.