USA job growth underscores economy's strength, tariffs a threat

Economy adds 213K jobs in June unemployment ticks up to 4 percent

Therefore, June's level of total U.S.jobs is now +250,000 (i.e., the sum of 213,000 and 37,000) versus what was reported by the BLS a month ago.

The number of employed people in the workforce rose by 102,000, while the number of unemployed jumped by 499,000, suggesting more people entered the labour force and actively sought jobs. Average hourly earnings advanced 2.7 per cent from a year earlier, while the jobless rate increased to 4 per cent from 3.8 per cent, the first rise in nearly a year.

"Despite ongoing concerns about being on the brink of a trade war, today's jobs report shows the continued strength of the economic recovery in the US", said Tony Bedikian, head of global markets at Citizens Bank.

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.

The OECD attributes this decline to the vast increase in part-time and temporary jobs since 2008.

The overall picture is again one of a strengthening labor market, but one that is still not tight enough to produce substantial wage growth.

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.

The report showed strength in the economy before a trade war started between the United States and China, which analysts warned could slow hiring, especially in the manufacturing sector. The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population.

The moderate wage growth should allay fears of a strong build-up in inflation pressures.


However, the retail sector shed 22,000 jobs.

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

Yet another month of robust job creation showed that, despite nationwide complaints of worsening labor shortage, there remained untapped pockets of idled workers at last able to reenter the jobs market after a decade of economic recovery.

Trump has also spoken about slapping tariffs on imported cars, trucks and auto parts, which General Motors has warned could hurt the USA auto industry and drive up vehicle prices.

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

But average, hourly earnings increased in both May and June, according to BLS numbers. The category, which includes computer systems designers, engineers, consultants and administrative staff, added 50,000 jobs during a robust month of hiring. The Fed's preferred inflation measure hit the central bank's 2 percent target in May for the first time in six years.

Construction payrolls rose by 13,000 last month after rising by 29,000 jobs in May. There are also growing fears of global disruptions as a trade fight escalates between the US and China.

"Leisure and hospitality" also registered a nice gain in jobs in the latest month, +25,000, led by "food services and drinking places", +16,000.

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