Published: Sun, July 08, 2018
Finance | By Claude Patterson

US Job Growth Was Likely Solid In June Despite Trade Risks

US Job Growth Was Likely Solid In June Despite Trade Risks

Construction payrolls rose by 13,000 last month after increasing by 29,000 jobs in May.

The manufacturing sector helped power the gains, adding 36,000 jobs, but the retail sector shed 22,000 positions.

The unemployment rate jumped from 3.8%, the lowest since 2000, to 4% because more people joined the labor force to look for work.

Average hourly pay rose just 2.7 percent in June from 12 months earlier.

The job growth shows the labour market shrugging off worries about a slowdown triggered by trade fights or rising borrowing costs.

In another sign of vigorous demand for labor, the results for April and May were revised higher by a total of 37,000 new jobs, bringing the average for the past three months to 211,000.

As hiring continues unabated, the Federal Reserve is likely to raise interest rates two more times this year, as it weighs concerns that the economy could overheat. That followed an increase of 5,000 jobs in May.

That said, the labor market isn't flawless. Given the flood of new workers, not all who got jobs pushed the unemployment rate up to 4% from 3.8%.

On the same day that the Trump administration began imposing tariffs on $34 billion in Chinese imports and Beijing hit back with tariffs on the same amount of US goods, the job gain showed that the 9-year old USA economic expansion - the second-longest on record - remains on firm footing.

Faster wage growth would have also indicated that inflation was building in the economy, which hasn't strongly been the case even though unemployment is low.

Nonetheless, the USA jobs market is incredibly hot right now with yesterday's NFIB jobs survey suggesting that in the small business sector, the proportion of firms looking to hire workers has been higher on only three occasions in the past 45 years. US tariffs on $34 billion worth of Chinese goods are due to come into effect on Friday. That kept the annual increase in average hourly earnings at 2.7 percent. This was most due to a 1 percentage point rise in the unemployment rate for black women, although their EPOP also rose by 0.6 percentage points.

Hanging over the labor market are President Trump's tariffs on goods from some of America's largest trading partners, along with retaliatory charges.

"Clearly, firms are looking for workers and have become somewhat desperate, but if they cannot find them, then job growth could be lower than the consensus", said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

The economy also faces a substantial threat from the Trump administration's trade war with China and from other, ongoing trade disputes with US allies, including Canada and Europe.

In April, there were up to 6.7 million job openings in the United States; the number was more than the people who were unemployed but were seeking unemployment.

It also boosted the USA stock indexes, which are expected to reap weekly gains on Friday after 14 days of losses.

Nearly half of June's construction jobs increase (+13,000) occurred in the "heavy and civil engineering" category, +6,000. There were gains in professional and business services employment as well as leisure and hospitality.

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