United States jobs growth stronger than expected

US Economy

US Economy

The job numbers for the month of June indicate US manufacturing continues to gain momentum.

Rather than being an omen of bad things to come, the rise suggests a positive outlook for the U.S. economy as it coincides with more than 600,000 people entering the labor force. It's the 93rd consecutive month of job gains, an impressively long and strong stretch of growth.

The small increase in unemployment - up from 3.8 percent in May - appears to be the result of more Americans searching for work, according to Labor Department figures released Friday. The increase continues an upward trend in mining employment.

"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. "There were some people who weren't participating in the labor force who are now being encouraged to return, so I'm not concerned about the uptick in unemployment", said Catherine Barrera, chief economist of the online job site ZipRecruiter. Average hourly earnings are 2.7 percent higher than a year ago, a lackluster pace compared to past eras of healthy job growth when wages were rising at 3.5 percent or more a year. This means that workers' wages will likely fall behind the rate of inflation, which in May reached 2.8 percent. It is expected to hover around its target for a while, in part because of labor market tightness.

Minutes of the Fed's June 12-13 policy meeting published on Thursday were upbeat on the labor market.

The central bank raised the benchmark lending rate last month, and is expect to hike twice more this year.

A worker cuts a piece from a steel coil at the Novolipetsk Steel PAO steel mill in Farrell, Pennsylvania, U.S., March 9, 2018.

This follows a survey in June, which showed record-high optimism among US manufacturers.


This suggests that these 600,000 newly available workers can quickly find work if they have the right skills and that the unemployment rate will very swiftly fall back.

Nonfarm payrolls climbed 213,000 after an upwardly revised 244,000 advance, Labor Department figures showed Friday.

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.

But the Trump administration's "America First" trade policy, which has tipped the United States into a trade war with China poses a risk to the labor market and economy.

What about tariffs? On Friday, the USA formally imposed an additional $34 million in tariffs on China. Economists say the effects could include companies curtailing both hiring and investment, which would have a cooling effect on the jobs figures in coming months.

The economy also faces a substantial threat from the trade tension with China and from other trade disputes with USA allies, including Canada and Europe. It's too soon to tell what impact they'll have - hiring in manufacturing continues to be strong, with 36,000 jobs added in June - but what we do know is that they are creating uncertainty, Hamrick said.

The picture was brighter for the leisure and hospitality industry. Construction jobs have increased by 282,000 over the year to meet housing demand, and mining has tacked on 95,000 jobs as energy prices jump.

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