US Job Growth Was Likely Solid In June Despite Trade Risks

Gladys Abbott
July 9, 2018

But the average was skewed downward in June because the job seekers were mainly those with only a high school education or less, who are generally paid lower wages, Barrera noted. The participation rate, or share of working-age people in the labor force, increased to 62.9 percent from 62.7 percent the prior month. This was most due to a 1 percentage point rise in the unemployment rate for black women, although their EPOP also rose by 0.6 percentage points. Neither the BLS report nor any of the establishment press outlets have sought to provide any explanation for this trend, which runs contrary to the commonly-accepted capitalist economic principle that a tighter labor market will result in higher wages as employers compete against one another for workers.

Here's a piece of good news for USA investors that will largely be buried because of the jobs report.

Here's what the latest report means for American workers and the U.S economy as we approach the second half of 2018. 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. The economy added 37,000 more jobs in April and May than previously reported.

All told, employers added 213,000 jobs in June.

Signs of the Trump administration's trade war with China and did not show up in the report.

Economists polled by Reuters had forecast nonfarm payrolls increasing by 195,000 jobs last month and the unemployment rate steady at 3.8 percent.

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The Fed is also gradually raising interest rates, easing off the extraordinary efforts it took to stimulate the economy after the Great Recession and looking instead to ward off future spikes in inflation.

"This report was more than enough to seal the deal on a July rate hike from the Bank of Canada", said Frances Donald, a senior economist with Manulife Asset Management.

Although average hourly wages grew 2.7% in June from a year ago, they didn't change much from May and came in below economists' expectations.

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. Some of the sectors that contributed to the growth include manufacturing which powered the growth by adding 36,000 jobs. While 12.4 percent is still high for this recovery, it is well below the rates of more than 14 percent seen the last time the unemployment rate was this low in 1999 and 2000.

Automakers added 12,000 jobs in June, but the tariffs could weigh on that industry's job growth in the coming months. The average work week for all private employees was unchanged at 34.5 hours.

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