US job growth in July slows more than expected
WASHINGTON: US job growth slowed more than expected in July as employment in the transportation and utilities sectors fell, but a drop in the unemployment rate suggested that labour market conditions continued to tighten.
With manufacturing payrolls increasing by the most in seven months, the moderation in hiring reported by the Labour Department on Friday likely does not reflect the rising trade tensions between the United States and other nations including China.
“While the ongoing trade dispute may discourage businesses to invest and hire down the road, jobs report suggests the jobs market is not yet collateral damage,” said Beth Ann Bovino, chief US economist at S&P Global Ratings in New York.
Nonfarm payrolls increased by 157,000 jobs last month, still more than the roughly 120,000 jobs per month needed to keep up with growth in the working-age population. The economy created 59,000 more jobs in May and June than previously reported.
Economists polled by Reuters had forecast payrolls increasing by 190,000 jobs last month. The unemployment rate fell onetenth of a percentage point to 3.9 per cent, even as more people entered the labour force.
A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped three tenths of a percentage point to 7.5 per cent, the lowest level since March 2001.
Wage growth remained moderate, with average hourly earnings increasing seven cents, or 0.3 per cent, after a gain of 0.1 per cent in June. The annual increase in wages was unchanged at 2.7 per cent in July.
President Donald Trump’s administration has imposed duties on steel and aluminum imports, provoking retaliation by US trading partners including China, Canada, Mexico and the European Union. Washington has also slapped 25 per cent tariffs on $34 billion worth of Chinese imports.
Beijing has fought back with matching tariffs on US exports to China. On Wednesday, Trump proposed a higher 25 per cent tariff on $200 billion worth of Chinese imports.
The trade war intensified on Friday, with China’s Commerce Ministry proposing import tariffs on $60 billion worth of US goods and warning that it reserved the right of further countermeasures. Economists have cautioned that the tit-fortat import duties, which have unsettled financial markets, could undercut manufacturing through disruptions to the supply chain and put a brake on strong US economic growth. There are also fears that the trade tensions could dampen business confidence and lead companies to shelve spending and hiring plans.
“Financial markets are feeling the impact,” said Sung Won Sohn, chief economist at SS Economics in Los Angeles. “The ongoing trade war with China and our allies could hurt investment spending and hold back job and wage gains.”
For now, a $1.5 trillion fiscal stimulus, which helped to power the economy to a 4.1 per cent annualised growth pace in the second quarter, is assisting the United States in navigating the stormy trade waters.
The dollar slipped against a basket of currencies while US Treasury yields fell. Stocks on Wall Street were mixed.
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