USA job growth strong but unemployment rate rises to 4%

Donald Trump

The economy added 31,800 positions in June and the unemployment rate rose to six per cent, from 5.8 per cent in May, Statistics Canada reported Friday in its latest labour force survey.

The figures for April and May were also revised up, showing that 37,000 more jobs were created in these months than previously estimated.

Economists had forecast that June would be another strong month for the US labor market, with nonfarm payrolls expected to have grown by 195,000 during the month with the unemployment rate expected to hold steady at an 18-year low of 3.8%, according to estimates compiled by Bloomberg.

Following these revisions, job growth in America has averaged 211,000 over the last three months - which is in line with what is needed to sustain a growing population.

The June jobs report marks the longest consecutive, positive monthly job expansion on record, at 93 months.

With a record 6.7 million unfilled jobs in April, economists are optimistic that wage growth will accelerate later this year.

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. Health-care jobs were up 25,000 and construction gained 13,000. It had declined for three straight months.

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

As hiring continues unabated, the Federal Reserve is likely to raise interest rates two more times this year, as it weighs concerns that the economy could overheat. That kept the annual increase in average hourly earnings at 2.7%. The average hourly wage has increased by just 2.7 percent in the past year.

Michael Gapen, chief United States 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.

Altogether, 285,000 new jobs have been added in the manufacturing sector in the past year. The central bank's governor said last week the next move would be decided by economic data.

The national unemployment rate was only 4 percent in June.

The broader USA economy appears to be on sturdy ground. Economists project that the GDP growth will maintain the yearly pace of 4% or even higher in the second quarter. In June, it was 2.7%, staying the same as the previous month, and falling short of economists' expectations.

Businesses hired robustly in June despite threats of trade tensions.

Analysts are also watching to see whether President Trump, whose office gets a preview of the numbers the day before the release, will tweet information about the report before it is due out from the Labor Department at 8:30 a.m. on Friday.

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