Economy

U.S. jobs growth stronger than expected

U.S. jobs growth stronger than expected

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 labor force participation has increased, which brought the unemployment rate up slightly from 3.8 percent to 4 percent. Average hourly earnings growth remained 2.7% against hopes of a slight pick-up to 2.8%.

Economists had predicted 195,000 payroll gains amid a shortage of available workers to fill jobs.

One notable weak spot was the retail sector which lost 22,000 jobs in the month.

The mixed signals of rising joblessness amid continued hiring could strike a flat note at the White House as President Donald Trump has repeatedly taken credit for the historic low levels of unemployment. 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.

While the sunny outlook led Federal Reserve officials last month to boost the number of interest-rate hikes they expect in 2018, an intensifying trade war threatens to sap economic momentum, and a shrinking pool of qualified workers may slow the pace of employment gains.

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"Healthy" rise in the unemployment rate: Even though it was expected to decline, the unemployment rate rose to 4 percent from 3.8 percent.

That said, the labor market isn't flawless. This extra labour supply has seemingly helped keep wage growth in check. It increases pressure to raise wages, and even curb business growth if there are not enough people to do the work. After revisions, job gains have averaged 211,000 per month over the past three months. 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.

Job openings are at record highs, meaning numerous job seekers are likely to find employment soon.

The U.S. Labor Department says for the first time in recorded history there is a greater number of job openings than people who are unemployed.

On Friday, the world witnessed the imposition of new tariffs by the U.S. and China on goods worth $34bn from each of the two countries. These people ultimately are classified as discouraged workers, who first fall down into a subset of the unemployment statistics (where the unemployment rate is now 7.8 percent in June compared with 7.6 percent in May) until they ultimately disappear completely from the workforce. So, taking this all together we have a U.S. economy growing at around 4% in the current quarter, that has an incredibly tight labour market with headline consumer price inflation potentially rising to 3% next week.