You are here

LATEST US DATA

Wage gains slow, unemployment up from 18-year low

Figures indicative that the labour market is still absorbing spare capacity

FILES-US-ECONOMY-EMPLOYMENT-IN-INDICATOR-ADP-133518.jpg
US hiring topped forecasts in June while unemployment rose from an 18-year low and wage gains unexpectedly slowed, indicating the labour market is still absorbing spare capacity.

Washington

US hiring topped forecasts in June while unemployment rose from an 18-year low and wage gains unexpectedly slowed, indicating the labour market is still absorbing spare capacity.

Payrolls rose 213,000 after an upwardly revised 244,000 advance, Labor Department figures showed on Friday. The median estimate of analysts surveyed by Bloomberg called for a gain of 195,000 jobs. Average hourly earnings advanced 2.7 per cent from a year earlier, while the jobless rate increased to 4 per cent from 3.8 per cent, the first rise in almost a year.

A steady pace of hiring and gradually rising wages, along with lower taxes, are helping underpin consumer spending and propelling a rebound in US growth this quarter.

sentifi.com

Market voices on:

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.

The rise in the jobless rate may ease any pressure on the Fed to raise interest rates at a faster pace. The rate is already below central bank estimates of levels sustainable in the long run, making it a potential source of upward pressure on wages and inflation.

Hanging over the labour market are President Donald Trump's tariffs on goods from some of America's largest trading partners, along with retaliatory charges. Levies on US$34 billion in Chinese goods took effect at 12:01 am Washington time on Friday. 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.

Revisions to prior reports added a total of 37,000 jobs to payrolls in the previous two months, according to the figures, resulting in a three-month average of 211,000. In general, monthly payroll gains of around 100,000 - or even a bit less - are sufficient to keep pushing down the unemployment rate, according to economists.

The details across industries showed continued strength in goods-producing jobs: Manufacturing added 36,000 to payrolls, the best month since December, including a 12,000 increase in the auto industry, the most since August. That's consistent with other reports showing strength in factory activity.

Service providers boosted payrolls by 149,000, led by a 54,000 gain in education and health services, and 50,000 in professional and business services. The retail industry's woes were also reflected in employment, as vendors cut 21,600 positions, the biggest drop since December. That followed a 25,100 gain in May.

Several measures showed that the labour market still has slack to absorb.

The number of employed people in the workforce rose by 102,000, while the number of unemployed jumped by 499,000, suggesting more people entered the labour force and actively sought jobs. The participation rate, or share of working-age people in the labor force, increased to 62.9 per cent from 62.7 per cent the prior month. The participation rate remains a closely-watched measure for central bankers. While improving prospects for employment and wages are helping attract people from the sidelines of the job market, the retirements of older workers are among factors that have been exerting downward pressure on participation.

The employment-population ratio, another broad measure of labor- market health, was unchanged at 60.4 per cent. BLOOMBERG