In June, the U.S. economy added over 195,000 new jobs, said the Labor Department in a report released Friday. That figure was slightly higher than what analysts on Wall Street were expecting and suggested a steady growth.
Wall Street was awaiting the employment report for June anxiously. It not only provides insight into the strength of the economy, but it also affects the timing of the decision of the Federal Reserve to start cutting back on a large part of its stimulus package.
A report that is strong increased the central bank’s likelihood of pulling back its purchases of bonds in September. That is a prospect that made many investors cautious over the last few weeks.
However, any signs of a weakness in the country’s labor market would most likely prolong the tapering back of the program that is currently purchasing bonds in the amount of $85 billion each month.
The Fed is also watching closely the level of unemployment. The rate of unemployment, which comes from a survey separate from the one that gives the jobs, remained steady at 7.6%, which was unchanged from its May figure.
Fed Chairman Ben Bernanke announced two weeks ago that he anticipated the program of bond buying would end when the rate of unemployment fell below 6.5%. The central bank believes that could happen as soon as June or July of next year.
Despite those signals from the central bank, that the labor market is strong enough to handle a stimulus reduction, the job creation pace has slowed over the past several months.
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