USA job growth strong but unemployment rate rises to 4%

Jeannie Matthews
July 9, 2018

The Labor Department on Friday reported another big month for job growth, with a larger than expected addition of 213,000 jobs for June. But in Friday's revised figures, BLS reports that the legal services industry actually gained 300 jobs in May, compared with April.

Today's figures also showed that the USA unemployment rate rose to 4% from an 18-year low of 3.8% in May as more people entered the labour force in the sign of confidence in the jobs market.

From Table B-3, average hourly earnings were +2.7% year over year in June economy-wide, while average weekly earnings were +3.0%.

Despite the small bump in unemployment, a decade of steady job growth following the Great Recession has pushed unemployment to the lowest level in decades.

The report also shows that the share of workers who have multiple jobs remained stable over the previous year at 4.8 percent. Over the past 12 months, this sector has gained 285,000 jobs, with about three-quarters of them involving durable goods such as metal products, computer parts and cars.

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On the negative side, the unemployment rate for black workers increased 0.6 percentage points to 6.5 percent from the record low hit in May. That trend is likely to continue through 2018, with some economists predicting the jobless rate will keep falling to 3.5 percent by year end. Some economists project economic output rose at better than 4% annual pace in the second quarter for the first time since 2014.

The job growth wasn't enough to keep the unemployment rate from rising from 3.8 percent to 4 percent, the government said July 6.

The report said most of the job growth occurred in professional and business services, manufacturing and healthcare - while retail trade lost jobs. While hiring and growth still look robust, the trade war is probably starting to slow it down, Daco said.

Canada added 9,100 full-time jobs in June and 22,700 part-time positions, while work in the less-desirable category of self-employment rose by 22,000. "At first glance, the bump in the unemployment rate ... gives the headline numbers a mixed hue, but the reality is that it is good to see more people both working and looking for work", he said.

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. Fed officials last month boosted the number of interest-rate hikes they expect in 2018 to four from three. A separate measure, average hourly earnings for production and nonsupervisory workers, also increased 2.7 percent from a year earlier, unchanged from the prior month's gain. So, taking this all together we have a United States economy growing at around 4% in the current quarter, that has an incredibly tight labour market with headline consumer price inflation potentially rising to 3% next week.

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