Positive Jobs Report Outpaces Tariff Wars

Ford trucks rolls of the line at a plan in Ohio

Ford trucks rolls of the line at a plan in Ohio

United States non-farm employment rose by 213K positions in June, but the unemployment rate climbed to 4.0%, up from 3.8% in May, according to the Bureau of Labor Statistics. An acceleration of this rate would have shown that employers were indeed paying up for the skilled workers they say are in decreasing supply. Average hourly earnings increased by 0.2% month-on-month and 2.7% year-on-year, weaker than economists had forecast.

Buoyant job creation: The U.S. economy continues to be one of the most dynamic job creators in the world, adding 213,000 jobs in June (the median estimate of analysts surveyed by Bloomberg called for a gain of 195,000).

Major U.S. stock indexes were mostly higher July 6 after the jobs report was issued, keeping the market on track for a weekly gain after two weeks of losses.

In the first six months of this year, 215,000 new jobs were created on average, which is above their average monthly growth of 182,000 in the past year, when the USA economy managed to generate 2.173 million new jobs, reported the Labor Ministry.

Despite the small bump in unemployment, a decade of steady job growth following the Great Recession has pushed unemployment to the lowest level in decades.




A steady pace of hiring and gradually rising wages, along with lower taxes, are helping underpin consumer spending and propelling a rebound in U.S. growth this quarter.

The United States has increased jobs monthly for more than seven years, but some analysts suggest that the escalating trade disputes between the USA and its allies could threaten growth. The U.S. and China slapped tit-for-tat duties on $34 billion worth of the other's imports on Friday. These individuals accounted for 23 percent of the unemployed, says the Labor Department. Over the past year, average monthly payroll gains have hovered around 200,000, and hiring has been running ahead of growth in the labor force. "Aside from the immediate job market impacts, the trade disputes risk raising prices for consumers hurting their purchasing power, which then reinforces the dampening impact on the job market", Hamrick added. It increases pressure to raise wages, and even curbs business growth if there are not enough people to do the work.

"The underlying fundamentals have been strong for quite some time and while we were a little surprised by the uptick in the unemployment rate, it appears to be caused by additional workers entering the labor force, which is a positive", Bedikian said.

"Overall, this "not too hot, not too cold" report supports our call for four Fed rate hikes in total this year", Gregory Daco, head of USA macroeconomics at Oxford Economics in NY, said in a note. Additionally, the Trump administration has drawn attention to the record-low of African American unemployment, even as it remained higher than the overall rate at 5.9%. The rate for white Americans was flat.

Businesses hired robustly in June despite threats of trade tensions. The public sector gained 11,800 jobs and the private sector lost 2,000.

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