US adds a solid 213000 jobs; unemployment up to 4 pct

Andrew Cummings
July 8, 2018

Economists were forecasting that June was another strong month for the USA labor market, with nonfarm payrolls expected to have grown by 195,000 during the month with the unemployment rate holding steady at an 18-year low of 3.8%, according to estimates compiled by Bloomberg. Before June's record, the lowest monthly Hispanic-Latino unemployment rate since BLS began tracking the statistic in 1973 was 4.8%. This uptick in people joining the workforce - there were 601,000 new entrants to the labor force in June - pushed up the unemployment rate. The increase is the same for both overall employment and production and nonsupervisory workers.

"If payroll growth remains anywhere near 200,000, the downward trend in the unemployment rate will return in due course", said Ian Shepherdson, chief economist of Pantheon Macroeconomics.

On Friday, the world witnessed the imposition of new tariffs by the USA and China on goods worth $34bn from each of the two countries.

Following the report, US stock turned positive after having been in red figures ahead of the report.

By sector, the numbers showed goods-producing industries added 46,600 positions in June thanks to job-creation boosts in construction, natural resources and manufacturing.

Nonetheless, an escalating trade war poses a clear threat.

The US economy created a higher-than-expected 213,000 jobs last month, official figures show.

While manufacturers opened 36,000 new jobs last month and the education and health sectors contributed 54,000 more, retailers shed 21,600 jobs mainly at general merchandise stores.

The job growth wasn't enough to keep the unemployment rate from rising from 3.8 percent to 4 percent, the government said July 6.

From Table B-3, average hourly earnings were +2.7% year over year in June economy-wide, while average weekly earnings were +3.0%. After unemployment dropped to 3.8 percent in May, sparking worries of labor shortages, over 700,000 women joined the labor force in June, thus cooling the job market.

Daco expects gradually firming wages, steady labour-force participation, falling unemployment persisting into the second half of 2018, and the Fed continuing to raise rates "unless trade policy foils these plans".

The economy also faces a substantial threat from the trade tension with China and from other trade disputes with USA allies, including Canada and Europe.

The unknowns include Canada's intensifying trade dispute with the United States and the challenging renegotiation of the North American Free Trade Agreement.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in June.

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