Friday, 20 July, 2018

United States job growth was likely solid in June despite trade risks

Professional and business services drove nearly a quarter of U.S. job growth in June. Manufacturing added 36,000 jobs the most since December according to the U.S. Department of Labor Employment gains, job hunter influx clears way for rate hike: experts
Ginger Lawrence | 08 July, 2018, 18:44

Nonfarm payrolls rose by 213,000 jobs last month, the Labor Department said on Friday. The Labor Department also revised its estimates for job growth in May, going from a previous estimate of 233,000 new jobs to 244,000 jobs new jobs.

Employment in the world's largest economy continued its brisk pace in June but the unemployment rate jumped as more people joined the job hunt, according to a government report on Friday (Jul 7). And the unemployment rate remains at its lowest in more than 18 years.

"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 USA", said Tony Bedikian, head of global markets at Citizens Bank. "We continue to closely monitor a range of factors, from yesterday's Fed minutes to the potential global impact of tariffs to the Treasury yield curve, and we are encouraged by numbers like those in today's report".

Workers who haven't gone to college accounted for all of this month's net increase in the labor force and employment. Fed officials last month boosted the number of interest-rate hikes they expect in 2018 to four from three.

Average hourly pay rose just 2.7 percent in June from 12 months earlier.

Average hourly earnings rose by 5 cents, or 0.2%, to $26.98, lower than market expectations for a 0.3% improvement.

The lack of wage growth is disappointing, but still higher than the rate of inflation, said Douglas Holtz-Eakin, president of the American Action Forum. Strong annual wage growth would offer confirmation that inflation pressures are building. "It indicates that we have more labor market slack".

Altogether, the data depicted a labour market that's not as tight as previously thought, easing any pressure on Federal Reserve policy makers to step up the pace of interest-rate hikes and potentially heartening employers who have had difficulty finding skilled workers.

U.S. warships pass through Taiwan Strait amid China tensions
Two U.S. warships traveled down the narrow Taiwan Strait between Taiwan and China on Saturday, Taiwanese officials said. Although the USA does not have formal diplomatic ties with Taiwan, it is its most powerful ally and top arms supplier.

The dollar extended losses against the euro and the yen after the employment report. Prices for longer-dated U.S. Treasuries rose. Savings from the tax cuts enabled companies in the Standard & Poor's 500 stock index to buy back a record number of shares in the first three months of 2018.

Many analysts read the higher jobless rate as an encouraging sign because the influx of almost 76,000 job seekers back into the labour market last month suggested more people are optimistic they can find work thanks to the hotter economy.

In general, monthly payroll gains of around 100,000 - or even a bit less - are sufficient to keep pushing down the unemployment rate, according to economists.

Gross domestic product estimates for the April-June period are above a 4 percent annualized rate, double the 2.0 percent pace logged in the first quarter. The United States is now in a trade war with all its top five trading partners: China, Canada, Mexico, the European Union and Japan.

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.

The economy also faces a substantial threat from the Trump administration's trade war with China and from other, ongoing trade disputes with USA allies, including Canada and Europe.

June was a record 93rd straight month in which private-sector employers hired more people than they fired or laid off.

"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.