U.S. Jobs Report Underlines The Case For Rate Hikes

U.S. Jobs Report Underlines The Case For Rate Hikes

"Let's remember that for some time, the unemployment rate has been below the level typically associated with 'full employment, ' but the relatively robust level of hiring being seen suggests there's more room" for the jobless rate to drop, he added. The rise in the unemployment rate was also "healthy" because it reflected an uptick in the labor participation rate (to 62.9 percent from 62.7 percent), raising hopes that the labor force can overcome some of its structural headwinds.

In spite of the tightening labor market, however, wage growth remains anemic. The increase is the same for both overall employment and production and nonsupervisory workers.

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

Although the report for June was far from uniformly strong, it will reinforce the perception that the US will continue to outpace other countries and should be able to navigate trade policy uncertainties as long as they don't lead to a full-blown global trade war. The public sector gained 11,800 jobs and the private sector lost 2,000.

In another sign of vigorous demand for labor, the results for April and May were revised higher by a total of 37,000 new jobs, bringing the average for the past three months to 211,000.

By industry, June was another strong month for the manufacturing sector, which added 36,000 jobs during the month after adding about half that number in May.

What about tariffs? On Friday, the USA formally imposed an additional $34 million in tariffs on China.

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Meanwhile, non-farm payroll employment increased by 213,000 last month, beating economists' expectation of 195,000 and indicating strong job growth.

Black unemployment rose to 6.5 percent from a record low of 5.9 percent; the Hispanic rate fell to a record low of 4.6 percent.

Automakers added 12,000 jobs in June, but the tariffs could weigh on that industry's job growth in the coming months.

Last month, President Trump broke with long-standing practice and tweeted about the jobs report prior to its official 8:30 a.m. release, prompting markets to move.

However, the annual increase in average hourly earnings was unchanged at 2.7%. And as is the case in most months, professional and business services as well as education and health services were the sectors that saw the largest increase in employment, with 50,000 and 54,000 jobs added in these sectors respectively. That tepid increase to an average of $26.98 per hour, however, is due to the disproportionately high number of positions filled by job seekers with high-school diplomas, who generally receive lower wages.

The Federal Reserve on Thursday reported some businesses had already scaled back or postponed planned investment because of the trade struggles and warned that many more promise to do more if the spats continue to escalate.

The unknowns include Canada's intensifying trade dispute with the United States and the challenging renegotiation of the North American Free Trade Agreement.