June jobs report, July 6, 2018

Jul 10, 2018, 02:15
June jobs report, July 6, 2018

This caused the unemployment rate to tick up to 4% from 3.8% even as employers added 213,000 jobs, and it's more evidence that faster growth is luring more people back into the workforce.

US unemployment rate ticked up to 4 percent in June from an 18-year low in the previous month, the Labor Department reported on Friday. Most economists say they still think the low unemployment rate will eventually force more employers to offer higher pay in order to fill jobs. 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 US corporations.

Remaining slack in the job market could be keeping a lid on wage growth, said Cathy Barerra, chief economist at ZipRecruiter.

Despite strong hiring, wage growth remained sluggish, and was effectively erased by inflation: average hourly earnings rose just 0.2 per cent to US$26.98, putting wages up 2.7 per cent over the same month previous year, the same as the 2.7 per cent rise in the Consumer Price Index.

It should be borne in mind that the proportion of Americans seeking employment or so-called the "employment rate" rose to 62.9% in June from 62.7% in May, but still remains close to the 40-year low of 62.3% reached in September 2015. The U.S. central bank increased interest rates last month for the second time this year and has projected two more rate hikes by year end. Construction payrolls likely increased after rising by 25,000 in May.

Service providers boosted payrolls by 149 000, led by a 54 000 gain in education and health services, and 50 000 in professional and business services.

One notable weak spot was the retail sector which lost 22,000 jobs in the month. The labor force participation rate, or the number of people who are actively employed or looking for work, rose to 62.9% from 62.7%.

The way Washington calculates the unemployment rate is a little odd, to say the least.

The labor force expanded by 601,000 jobs over the month, with an influx of new women and teen workers more than offsetting a dip in labor force participation among men, said Gregory Daco of Oxford Economics. However, that share is eventually expected to resume a longer-term decline as Baby Boomers continue to retire in large numbers.

Bureau of Labor Statistics data showed that the United States added 213,000 jobs, with additions across multiple sectors.

The report provided positives all around. What's more, gains for April and May were revised up by 37,000. At the same time, more people entered the labour force to look for work, helping push the unemployment rate up for the first time in nearly a year.

For the Fed, the report presents a bit of a dilemma. It increases pressure to raise wages, and even curb business growth if there are not enough people to do the work.

This includes over 5,000 new positions in computer and electronic products, 7,000 jobs in fabricated metals, and over 12,000 jobs in motor vehicles and parts. This was more than the 190,000 forecast by economists.

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