WASHINGTON, July 8, 2018 (BSS/AFP) – Employment in the world’s largest
economy continued its brisk pace in June but the unemployment rate jumped as
more people joined the job hunt, according to a government report Friday.
The US added 213,000 new jobs for the month, well above analyst
expectations, but the jobless rate rose 0.2 points to four percent, erasing
the improvement in May and April.
Yet another month of robust job creation showed that, despite complaints
from companies nationwide about the worsening labor shortage, there remained
untapped pockets of idled workers at last able to reenter the jobs market
after nearly a decade of economic recovery.
As unemployment rose, the closely watched labor force participation rate
also edged higher to 62.9 percent, while the number of people counted as
unemployed rose to 6.6 million people, up nearly a half million.
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.
The mixed signals of rising unemployment 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.
But in fact more people entering the workforce is a sign of optimism that
jobs are available in an economy now entering its 10th year of expansion. And
the unemployment rate remains at its lowest in more than 18 years.
– Little wage pressure –
Most economists agreed the uptick in the unemployment rate is the result
of volatile figures used in the calculations.
Ian Shepherdson, chief economist of Pantheon Macroeconomics, said “we
can’t stress enough that all the numbers from the household survey are so
volatile that they’re essentially meaningless on a month-to-month basis.”
Despite strong hiring, wage growth remained sluggish, and was effectively
erased by inflation: average hourly earnings rose just 0.2 percent to $26.98,
putting wages up 2.7 percent over the same month last year, the same as the
2.7 percent rise in the Consumer Price Index.
But that is good news for the Federal Reserve since they will not feel
pressure to raise interest rates faster.
The central bank raised the benchmark lending rate last month, and is
expect to hike twice more this year.
The professional and business services sector added 50,000 new positions.
Manufacturing rose by 36,000, while the fabricated metals industry, which is
at the heart of Trump’s current trade battle, added 7,000 new workers.
“Protected industries are increasing production until the bite of tariffs
on margins hits while threatened industries are scrambling to get ahead of
tariffs,” Diane Swonk, chief economist of Grant Thornton said.
One notable weak spot was the retail sector which lost 22,000 jobs in the
month. Swonk said the industry “suffered a blow during the month as announced
store closings finally kicked in.”
Still, Satyam Panday of S&P Global Ratings summarized the view of
economists that “Despite simmering trade tensions, hiring in the US continues
to stay strong.”
Jim O’Sullivan, chief US economist at High Frequency Economics, said gains
have averaged 215,000 month so far this year, up from 182,000 “more than
strong enough to keep the unemployment rate trending down over time.”