US economy posts strong job growth
washington — US job growth increased more than expected in June as manufacturers stepped up hiring, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases.
Non-farm payrolls rose by 213,000 jobs last month, the Labour Department said on Friday. Data for April and May was revised to show 37,000 more jobs created than previously reported. The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.
The unemployment rate rose to 4.0 per cent from an 18-year low of 3.8 per cent in June as more people entered the labour force in a sign of confidence in the jobs market. That was the first increase in the jobless rate in 10 months.
The labour force participation rate, or the proportion of workingage Americans who have a job or are looking for one, rose to 62.9 per cent last month from 62.7 per cent in May. It had declined for three straight months.
Average hourly earnings gained five cents, or 0.2 per cent in June after increasing 0.3 per cent in May. That kept the annual increase in average hourly earnings at 2.7 per cent. The moderate wage growth
should allay fears of a strong buildup in inflation pressures. The Fed’s preferred inflation measure hit the central bank’s 2 per cent target in May for the first time in six years. It is expected to hover around its target for a while, in part because of labour market tightness.
Minutes of the Fed’s June 12-13 policy meeting published on Thursday offered an upbeat assessment of the labour market. The US central bank increased interest rates last month for the second time this year and has projected two more rate hikes by year end.
The dollar extended losses against the euro and the yen after
the employment report. Prices for US Treasuries rose. US stock index futures were little changed.
With a record 6.7 million unfilled jobs in April, economists are optimistic that wage growth will accelerate later this year.
Economists polled by Reuters had forecast nonfarm payrolls increasing by 195,000 jobs last month and the unemployment rate steady at 3.8 per cent.
A broader measure of unemployment, which includes people who want to work but have given up searching and those working parttime because they cannot find fulltime employment, rose to 7.8 per
cent last month from a 17-year low of 7.6 per cent in May. The employment report together with data from the Commerce Department showing the trade deficit narrowed 6.6 per cent to a 1-1/2-year low of $43.1 billion in May reinforced expectations of robust economic growth in the second quarter.
Gross domestic product estimates for the April-June period are above a 4 per cent annualized rate, double the 2.0 per cent pace logged in the first quarter.
But the Trump administration’s “America First” trade policy, which has tipped the US into a trade war with China poses a risk to the labour market and economy.
President Donald Trump has imposed tariffs on a range of imported goods, including steel and aluminum, to protect domestic industries from what he says is unfair competition from foreign manufacturers.
Major trade partners, including China, Canada, Mexico and the European Union, have retaliated with their own tariffs. The US and China slapped tit-for-tat duties on $34 billion worth of the other’s imports on Friday.