Job growth remains steady, but jobless rate ticks higher

Daniel Fowler
July 8, 2018

It needs to create about 120,000 jobs per month to keep up with growth in the working-age population.

USA non-farm payrolls increased by rose by 213,000 jobs last month, the Labor Department said today. However, fears of a trade war with other countries, especially China, have many anxious the economy could slow down or shrink in the months ahead.

Despite the small bump in unemployment, a decade of steady job growth following the Great Recession has pushed unemployment to the lowest level in decades.

The legal services employment numbers come amid a generally positive jobs report for the US economy as a whole, which gained 213,000 jobs in June and reportedly outperformed economists' expectations.

"We may be heading into a trade war but the good news is, the economy at least seems to have some good momentum", said Michael Feroli, chief United States economist at JPMorgan Chase & Co "We still have some capacity to grow above trend without triggering too much inflation worry".

Because it means that more people are starting to look for jobs.

"It's a good thing". Some 600,000 people entered the labor force in June, the Labor Department said. "It indicates that we have more labor market slack". There are more openings right now than unemployed workers, leading businesses to expand hiring to historically disadvantaged groups. According to a report Thursday from the human-resources-software provider ADP, business' "number one problem is finding qualified workers".

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The jobs report Friday showed that, compared with a year earlier, overall employment was up 1.2 per cent last month following the creation of 214,900 jobs.

Average hourly earnings of private-sector workers rose 2.7 percent in June from a year ago, in line with recent monthly readings, suggesting that wage growth remains modest. And companies have been offering more benefits to attract and retain their workers.

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. This is likely to result in a slower pace of rate hikes next year.

Ian Shepherdson, chief economist of Pantheon Macroeconomics, said "we can't stress enough that all the numbers from the household survey are so volatile that they're essentially meaningless on a month-to-month basis".

Tapping into the potential pool of those who have given up looking for work, the job market seems to still have room for improvement.

Manufacturing and health care added the most jobs in June - hospitals added 11,000 jobs over the course of the month - while the retail industry lost 22,000 positions, a disappointing turn from what had been an encouraging boost in May. 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 also faces a substantial threat from the trade tension with China and from other trade disputes with USA allies, including Canada and Europe.

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