Economy

U.S. job growth strong but unemployment rate rises to 4%

U.S. job growth strong but unemployment rate rises to 4%

Although the report for June was far from uniformly strong, it will reinforce the perception that the US will continue to outpace other countries and should be able to navigate trade policy uncertainties as long as they don't lead to a full-blown global trade war.

There are lots of jobs being created, but not enough people to fill them. Also, President Donald Trump has slapped tariffs on imports that have provoked tit-for-tat countermeasures by other countries in an escalating trade war that's starting to unnerve USA corporations.

The employment increase last month beat economist expectations for a 20,000 gain and was the second highest so far in a year where job creation has been sluggish.

Satyam Panday of S&P Global Ratings, says that considering the economic momentum, there are chances of steady labor force participation as well as a reduced unemployment rate come the second half of 2018.

"Job growth occurred in professional and business services, manufacturing, and health care, while retail trade lost jobs", reports the Labor Department in a written statement.

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The leap in manufacturing employment was nearly all within the durable goods realm, +32,000.

For many, the jobs numbers helped reinforce their predictions.

The healthy payroll expansion undertaken by architectural and engineering firms is encouraging news for contractors. This suggests difficulties of finding qualified workers are hugely overstated.

Other big job creators are Empire Outlets, being built on the St. George waterfront, and the Staten Island Mall, which recently added 242,000-square-feet to its footprint.

Before June's record, the lowest monthly Hispanic-Latino unemployment rate since BLS began tracking the statistic in 1973 was 4.8%. Manufacturing led the way with an increase of 36,000 jobs, 12,000 of which were in autos.

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Analysts have been puzzled by the consistency of the modest gain in wages irrespective of the growth. There are two tables focusing on compensation in the Employment Situation report, B-3 and B-8.

But wage growth is still weak - an increase of just 5 cents an hour in June. The government sector added 11,000 jobs, mostly due to an increase of 13,000 jobs in local government.

Wages were a bit of a disappointment in Friday's report, with average hourly earnings rising by 0.2% over the prior month and 2.7% over the prior year. That followed a 25,100 gain in May. The factory jobs were concentrated in the automobile sector, which had seen a decline in employment in May after a fire at a parts supplier disrupted production.

Some companies will likely respond to the tariffs by putting their hiring plans on hold until the trade picture becomes clearer.

Interestingly, around 600,000 new workers entered the labour force last month, but bear in mind this report is a survey and tends to be very volatile month to month.

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