Economy

United States job growth strong; unemployment rate rises to 4.0 percent

United States job growth strong; unemployment rate rises to 4.0 percent

Last month, USA employers added an extra 213,000 jobs which was higher than the expected figure thus extending America's long-running growth line.

As unemployment rose slightly to 4.0 percent, the closely-watched labor force participation rate also edged higher to 62.9 percent, while the number of people counted as unemployed rose to 6.6 million people, up almost a half million.

Average hourly earnings of private-sector workers rose 2.7 percent in June from a year ago, in line with recent monthly readings, suggesting that wage growth remains modest.

The job growth shows the labour market shrugging off worries about a slowdown triggered by trade fights or rising borrowing costs.

The economy added 37,000 more jobs in April and May than previously reported.

In addition, the data should encourage the Federal Reserve to hike interest rates at least once more this year (with the balance of risks tilting toward two hikes). The majority of the increase is in support activities for mining. With 93 straight months of job growth - a historical record - many employers have said they're feeling pressure to raise wages.

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. 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.

Faster wage growth would also indicate that inflation is building in the economy, which hasn't been the case even though unemployment is this low.

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Nonetheless, the USA jobs market is incredibly hot right now with yesterday's NFIB jobs survey suggesting that in the small business sector, the proportion of firms looking to hire workers has been higher on only three occasions in the past 45 years. That tepid increase to an average of $26.98 per hour, however, is due to the disproportionately high number of positions filled by job seekers with high-school diplomas, who generally receive lower wages.

Michael Gapen, chief United States economist at Barclays Plc in NY and a former Fed official, said that the boost in workers coming into the labour market bodes well for pushing down the unemployment rate again. The Fed's preferred inflation measure hit the central bank's 2 percent target in May for the first time in six years.

There's still more room to run for America's labour market, just as a trade war threatens the outlook for the world's largest economy.

These figures are capable of creating confidence in the economy of the US.

Nearly half of June's construction jobs increase (+13,000) occurred in the "heavy and civil engineering" category, +6,000.

It also boosted the USA stock indexes, which are expected to reap weekly gains on Friday after 14 days of losses. The category, which includes computer systems designers, engineers, consultants and administrative staff, added 50,000 jobs during a robust month of hiring.

"Leisure and hospitality" also registered a nice gain in jobs in the latest month, +25,000, led by "food services and drinking places", +16,000.