U.S. job growth strong; unemployment rate rises to 4.0 percent

U.S. job growth strong; unemployment rate rises to 4.0 percent

USA employers kept up a brisk hiring pace in June by adding 213,000 jobs in a sign of confidence despite the start of a potentially punishing trade war with China.

Last month, U.S. employers added an extra 213,000 jobs which was higher than the expected figure thus extending America's long-running growth line. Year over year, the sector was down 800 jobs as well. Prices for longer-dated U.S. Treasuries rose. The U.S. central bank increased interest rates last month for the second time this year and has projected two more rate hikes by year end. They had expected that the unemployment rate held steady at 3.8%, its lowest level since 2000. 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.

Mining employment continues to trend upward as the USA adds thousands of jobs in June. From manufacturing to services industries, companies are reporting difficulties finding skilled workers such as truck drivers, carpenters and electricians.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, rose to 7.8 percent last month from a 17-year low of 7.6 percent in May. "A disappointing number would not be a sign of weakness, other than in labor supply". The department also boosted its estimate for April job growth up to 175,000 - up from an earlier assessment of 159,000.

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

Ontario added 34,900 jobs for an increase of 0.5 per cent compared with the previous month, while Saskatchewan posted its largest monthly gain in over six years with the creation of 8,300 positions, which represented 1.5 per cent growth.

Although average hourly wages grew 2.7% in June from a year ago, they didn't change much from May and came in below economists' expectations.

Black unemployment rose to 6.5 percent from a record low of 5.9 percent; the Hispanic rate fell to a record low of 4.6 percent. Meanwhile, yesterday's minutes of the June FOMC meeting reported "some" contacts said, "plans for capital spending had been scaled back or postponed as a result of uncertainty over trade policy".

Gross domestic product estimates for the April-June period are above a 4 percent annualized rate, double the 2.0 percent pace logged in the first quarter.

Major trade partners, including China, Canada, Mexico and the European Union, have retaliated with their own tariffs.

On Friday, the world witnessed the imposition of new tariffs by the USA and China on goods worth $34bn from each of the two countries. Beijing has said it would respond in equal measure. More specifically, hiring in the manufacturing sector - which should be the most sensitive to retaliatory trade sanctions - is running at the fastest pace since 1998.

"It's hard to fathom how the robust manufacturing conditions will be sustained", said Joe Brusuelas, chief economist at RSM in NY.

Mara Fortin, who owns seven Nothing Bundt Cake stores in the San Diego area, said she raised pay last month to $13 an hour from $11.50.

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