U.S. employers added a solid 223,000 jobs in June, and the unemployment rate fell to 5.3 percent, a seven-year low.
The drop in the unemployment rate from 5.5% in May to 5.3% June takes it to the level that the US government considers full employment, and heightens expectations that the Federal Reserve will raise interest rates as soon as September.
However, the Labor Department said the biggest reason for the fall in the unemployment rate was because people out of work gave up looking for a job and were thus no longer counted as unemployed.
The addition of 223,000 jobs was lower than the 233,000 economists had expected. The department also had to revise down, by 60,000, the number of jobs it previously said were added in April and May.
“The headline payrolls rise was only 223,000, a little less than the published consensus, though we suspect that the real consensus was closer to our house view of 260,000,” Rob Carnell, Chief International Economist at ING, said. “Rubbing salt into the wound, there were also 60,000 of downward revisions, and the May result was revised down to 254,000 from 280,000.”