WASHINGTON -- Hiring has broken out to a new, higher level as employers added a better-than-expected 195,000 jobs in June and the prior two months were revised upward, a government said Friday in a firecracker of a report.
Most mainstream economists had expected June jobs in the range of 150,000 to 175,000, so the latest reading of a key economic indicator was a positive surprise. The Labor Department also revised upward the prior two months, noting that April's 149,000 jobs estimate was actually 199,000 new jobs, and May's 175,000 was really 195,000.
"This is a very solid report," said Mark Zandi, the chief economist for forecaster Moody's Analytics. "In addition to the solid job gains, it is also encouraging that hours worked per week remain high, which is a positive leading indicator for jobs, and hourly earnings growth is holding up."
Added Scott Anderson, the chief economist of San Francisco-based Bank of the West, "The June payroll figures did not disappoint, coming in far better than analysts expected. The jobs recovery is finally starting to join the rest of the economic expansion."
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The positive numbers come on top of improving home sales, stronger consumer sentiment and sizzling car sales. Over the past six months, hiring has averaged almost 202,000 a month, a rate that will begin bringing down the jobless rate if it continues.
Despite all this improvement, most predictions of the gross domestic product -- the sum of goods and services in the U.S. economy -- remain subdued. It points to an economy that's getting its mojo back but still has a way to go.
"I still don't think the job market is off and running. Real GDP growth has slowed meaningfully so far this year, and this should show up in softer job growth in coming months," Zandi cautioned. "The weak global economy is hurting manufacturing exports and jobs, and government layoffs remain a significant drag."
In fact, manufacturers shed 6,000 jobs in June, after several months of sluggish hiring.
"This was the fourth straight month of declining manufacturing employment, continuing hiring weaknesses in the sector that we have seen since mid-2012. Over the course of the past 12 months, the sector has added just 29,000 net new workers, or 1.3 percent of all of the 2.3 million nonfarm jobs added during that time," Chad Moutray, the chief economist of the National Association of Manufacturers, observed in his blog Shopfloor.org.
The unemployment rate held steady at 7.6 percent last month, even after what now is three solid months of hiring. That's in part because workers who had given up are coming back to look for jobs, making the labor-force participation rate rise to 63.5 percent in June from 63.3 percent in May, an important move given the size of the U.S. economy.
"Not necessarily a bad thing, but it could keep the unemployment rate elevated for a long time despite the better numbers," Anderson said.
The one sign of trouble in Friday's report was a big jump in the number of discouraged workers and people who were working part time for economic reasons. This jump drove up the gauge of "underemployment" by half a percentage point, and if it continues for several months, it might represent a troubling trend.
The White House offered the strong June numbers a subdued welcome.
"So far this year, 1.23 million private-sector jobs have been added. The household survey showed that the unemployment rate remained at 7.6 percent in June, down from 8.2 percent a year ago," Alan Krueger, the head of the White House Council of Economic Advisers, said in a blog.
Republicans gave a grudging thumbs-up to the report.
"There's some good news in this report, but economic growth is still tepid, the unemployment rate is far too high and the president continues to promote policies that undermine robust job creation," House Speaker John Boehner, R-Ohio, said in a statement.
The top driver of job growth last month was the leisure and hospitality sector, at 75,000. This kind of hiring suggests that Americans are loosening the purse strings and will travel more this summer.
The professional and business services sector wasn't far behind, adding 53,000 jobs in June. This sector usually involves better-paying white-collar jobs and consumers with more disposable income to spend in the economy.
Retailers added 37,000 jobs and the sector appears to be gaining steam.
"Today's strong jobs report is welcomed news for the economy and may signal positive and accelerated momentum for the second half of 2013," Jack Kleinhenz, the chief economist for the National Retail Federation, said in a statement. "Payrolls came in stronger than expected, including in the retail industry, which witnessed strong gains in building supplies, clothing and sporting goods. The economy is currently stable but traction and pace remain uncertain."
Weighing against an even stronger hiring number, the transportation and warehousing sector shed more than 5,000 jobs in June. Total private-sector hiring in June topped 202,000, but the overall number was knocked back by 7,000 lost jobs in government, 5,000 of them in the federal government.