United States jobs growth stronger than expected

Eileen GuzmanJul 07, 2018

Looking at the bigger picture, the best measure of how robust the labor market is (the ratio of those aged 25-54 who have jobs to the overall 25-54 population) returned to cycle highs in June at 79.3% (matching February's level). More than 600,000 workers joined the economy last month, bringing the total labor force participation rate to 62.9 percent. 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.

Policymakers at the Federal Reserve, the United States central bank, monitor the report because they can raise interest rates when employment is close to full, wages are rising healthily and unemployment is low.

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

"The solid 213,000 gain in non-farm payrolls in June, which followed an even stronger 244,000 rise in May, illustrates that labor market conditions remain unusually strong", said Andrew Hunter, U.S. economist at Capital Economics. "Consumer perceptions of the labor market also remain near multi-decade highs". But retailers shed 21,600 jobs, with the losses concentrated at general merchandise stores.

Manufacturers and services firms have said in recent surveys that their business is improving despite anxiety about the tariff showdown.

Yet the tax cuts have done little to generate substantial pay growth. Last month, U.S. employers added 213,000 jobs, exceeding already high expectations of 195,000.

The U.S. economy faces potential drags going forward, including escalating trade disputes with major trading partners such as the European Union, China, Canada and Mexico.

The Trump administration has also applied tariffs on steel and aluminum from allies like Canada and Mexico and has threatened to abandon the North American Free Trade Agreement with those two countries.

Following the report, USA stock turned positive after having been in red figures ahead of the report.

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