Booming US jobs market lifts chance of rate rise

A worker stacks packaged Beautyrest bed frames at the Hollywood Bed Frame Company factory in Commerce California seven miles southeast from downtown Los Angeles

Hispanic Unemployment Rate Sinks to All Time Low in June ROBYN BECK AFP Getty Images 6 Jul 2018

Last month, United States employers added an extra 213,000 jobs which was higher than the expected figure thus extending America's long-running growth line.

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. The unemployment rate edged up to 4 percent, but this was due to a reported surge of 601,000 people entering the labor force.

Wage numbers again disappointed, with average hourly earnings up just 2.7% year over year, one-tenth of a percentage point below expectations.

"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.

In another sign of vigorous demand for labor, the results for April and May were revised higher by a total of 37,000, bringing the average for the past three months to 211,000. This suggests the Federal Reserve needs to keep raising interest rates with at least two more rate hikes likely this year. The majority of the increase is in support activities for mining. "It indicates that we have more labor market slack".

Workers who haven't gone to college accounted for all of this month's net increase in the labor force and employment.

The economy continues to show many signs of strength despite the brewing trade war.

The job tally, nonetheless, shows the sustained prowess of the economy, which has now maintained 9 years of expansion, the second longest period on record.

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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.

Michael Gapen, chief USA economist at Barclays Plc in NY and a former Fed official, said that the boost in workers coming into the labour market bodes well for pushing down the unemployment rate again. USA tariffs on $34 billion worth of Chinese goods are due to come into effect on Friday.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, rose to 7.8 percent last month from a 17-year low of 7.6 percent in May. "The unchanged 2.7 percent rise in June helps keep the Fed on a gradual path of rate hikes", MarketWatch said.

These figures are capable of creating confidence in the economy of the US.

Construction payrolls rose by 13,000 last month after rising by 29,000 jobs in May.

Trump has also spoken about slapping tariffs on imported cars, trucks and auto parts, which General Motors has warned could hurt the USA auto industry and drive up vehicle prices. Economists say the effects could include companies freezing future investment and potentially additional hiring, which would eventually have a cooling effect on the jobs figures in coming months.

"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.

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