Published: Mon, July 09, 2018
Finance | By Marshall Campbell

United States jobs report shows higher unemployment rate, more jobs than forecast

United States jobs report shows higher unemployment rate, more jobs than forecast

Nonfarm payrolls increased by rose by 213,000 jobs last month, the Labor Department said on Friday. The labor force participation has increased, which brought the unemployment rate up slightly from 3.8 percent to 4 percent.

Despite a relatively tight labour market, wage growth remains stuck in the 2 per cent range, with the annual gain of 2.7 per cent unchanged from May.

Health care added 25,200 jobs, nearly exactly in line with its average over the a year ago.

"The story would be a prime working-age woman who's been at home perhaps taking care of children or older adults who now looks out and sees a very good job opportunity and moves right into the ranks of the employed", Gapen said on Bloomberg TV. The breakdown of the gains however was less rosy - centered around self- employment, part-time work and the public sector. For instance, Hispanic unemployment is at a new low, according to the Bureau of Labor Statistics.

The US added 213,000 new jobs for the month, well above analyst expectations, but the jobless rate rose 0.2 points to four percent, erasing May's improvement.

"This report was more than enough to seal the deal on a July rate hike from the Bank of Canada", said Frances Donald, a senior economist with Manulife Asset Management. An acceleration of this rate would have shown that employers were indeed paying up for the skilled workers they say are in decreasing supply.

Manufacturers hired 36,000 workers in June, the most in six months, adding to the 19,000 jobs created in May.

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That said, the labor market isn't flawless.

The bottom line is that the buoyancy in June's USA labor market statistics will reaffirm the Federal Reserve's view that the economy is doing super-well at present and that further interest rate hikes will be justified. That's an increase in total employment of a quarter of a million jobs.

Strong jobs growth continues at a time when the economy is growing 4%, and inflation is about to break 3%. Over the past three months, the economy has produced a robust average monthly job gain of 211,000.

Satyam Panday of S&P Global Ratings, says that considering the economic momentum, there are chances of steady labor force participation as well as a reduced unemployment rate come the second half of 2018.

At the same time, the unemployment rate rose to 4 per cent from 3.8 per cent, the government said Friday, as more people began looking for a job and not all of them found one. 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.

For workers, a hot job market is a good thing, resulting in what so far have been modest increases in wages.

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