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USA job growth strong; unemployment rate rises to 4 percent

09 July 2018

United States non-farm employment rose by 213K positions in June, but the unemployment rate climbed to 4.0%, up from 3.8% in May, according to the Bureau of Labor Statistics.

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.

U.S. hiring topped forecasts in June while unemployment rose from an 18-year low and wage gains unexpectedly slowed, indicating the labour market is still absorbing spare capacity.

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

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"Three of the five states that ranked the worst in this study (Missouri, Alaska, and Kansas) have all experienced a decrease in employment growth over the past year", a representative told Moneyish. "Aside from the immediate job market impacts, the trade disputes risk raising prices for consumers hurting their purchasing power, which then reinforces the dampening impact on the job market", Hamrick added. The government sector added 11,000 jobs, mostly due to an increase of 13,000 jobs in local government.

The Hispanic-Latino unemployment rate was 5.9% in January of 2017, the month President Trump took office. Manufacturing added a healthy 36,000 jobs in June.

Economists had forecast that employers added 195,000 payrolls last month, according to the median estimate compiled by Bloomberg. Hispanic unemployment fell to a record low of 4.6 percent in June, and unemployment remains near record lows for African Americans and for Americans with less than a high school degree.

"Job growth occurred in professional and business services, manufacturing, and health care, while retail trade lost jobs", reports the Labor Department in a written statement.

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Analysts have been puzzled by the consistency of the modest gain in wages irrespective of the growth.

Wage growth is barely keeping ahead of inflation, which is firming up as the economy strengthens.

- USA 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.

Jim O'Sullivan, chief USA 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". He expects unemployment to reach 3.5 percent by the end of the year. According to a report Thursday from the HR-software provider ADP, business' "number one problem is finding qualified workers". Most economists say they still think the low unemployment rate will eventually force more employers to offer higher pay in order to fill jobs.

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USA job growth strong; unemployment rate rises to 4 percent