Employers added 195,000 new jobs to their payrolls last month, the Labor Department said, while unemployment rate held steady at 7.6 percent as more people entered the workforce, this in turn cemented expectations for the Fed to start winding down its stimulus program by September
Job growth was stronger than expected in June and the payroll gains for the prior two months were revised higher, cementing expectations for the Federal Reserve to start winding down its massive stimulus program as early as September.
Employers added 195,000 new jobs to their payrolls last month, the Labor Department said on Friday, while the unemployment rate held steady at 7.6 percent as more people entered the workforce.
The government revised its count for April and May to show 70,000 more jobs were created than previously reported, a sign the economy was on solid ground, despite higher taxes, government spending cuts and signs of weakness overseas.
"The report was the evidence the Fed was looking for to justify their decision to begin tapering purchases before the end of the year," said Scott Anderson, chief economist at Bank of the West in San Francisco.
Prices for US government bonds tumbled, pushing the yield on the benchmark 10-year Treasury note to a two-year high of 2.74 percent, as traders braced for a slowing in the purchases the Fed has been making to keep borrowing costs low.
The higher yields on Friday helped lift the dollar to a near three-year high against a basket of currencies.
At the same time, stocks rose as investors welcomed the latest signs of the economy's resilience, with the Standard & Poor's 500 index ending the week up 1.6 percent.
Economists polled had expected employment to increase 165,000 last month and the jobless rate to fall a tenth of a percentage point to 7.5 percent.
In the second quarter, job growth averaged 196,333 per month, in line with the 200,000 jobs that economists say the Fed wants to see each month. For the first half of the year employment gains averaged just over 200,000 per month.
In a further bright sign, average hourly earnings rose by the most since November.
Two weeks ago, Fed Chairman Ben Bernanke said the US central bank expected to start cutting back later this year on the $85 billion in bonds it is purchasing each month and would likely bring the program to a complete close by the mid-2014 if the economy progressed as it expected.
The jobs report, together with other relatively upbeat data on housing, auto sales and manufacturing, made that plan more likely. "A good guess would be in September, I don't think they are anxious to pull the trigger beforehand," said Ray Stone, an economist at Stone & McCarthy Research Associates in Princeton, New Jersey.
A Reuters poll of big bond dealers conducted after the jobs figures were released found that most of them, including Goldman Sachs and JPMorgan, expect the central bank to begin dialing back its purchases in September.
READ MORE ON Job growth, payroll gains, Federal Reserve, Labor Department, economy, benchmark 10-year Treasury, yields, Fed Chairman Ben Bernanke, Goldman Sachs, JPMorgan, Retail jobs
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Economy turning for sure but cant say for mkts: DSP