Economy

US job growth underscores economy's strength, tariffs a threat

US job growth underscores economy's strength, tariffs a threat

Mining added another 5,000 jobs in June, according to data released July 6 from the U.S. Bureau of Labor Statistics.

The job numbers for the month of June indicate USA manufacturing continues to gain momentum.

A long run of impressive monthly job creation is among the main reasons why the projections of economists, in both the private and public sectors, have continued to be bullish for US growth, despite growing uncertainty about the rest of the global economy and the threat of a trade war.

Employers in the United States are thought to have kept up their brisk pace of hiring in June, reflecting the durability of the second-longest US economic expansion on record even in the face of a trade war with China.

The government said the increase in the unemployment rate came due to a rise in the labor participation rate, which increased 0.2 percentage points to 62.9 percent as 601,000 people came off the sidelines and re-entered the labor force. The central bank could stick to its plan to gradually increase interest rates.

The June jobs data showed an economy that may be on the cusp of producing stronger pay growth, something that could be disrupted if additional tariffs are imposed. But for now the sector, which accounts for about 12 percent of the US economy, appears in good health.

But in fact more people entering the workforce is a sign of optimism that jobs are available in an economy now entering its 10th year of expansion.

"There's definitely still a lot of room for the labour market to absorb the slack", Kevin Hassett, chairman of the White House Council of Economic Advisers, said on Bloomberg Television.

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Stocks jumped on Friday, riding the wave of the robust jobs report.

Even nicer, another 37,000 new jobs were added to April and May. The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.

Jim O'Sullivan, chief U.S. 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".

The professional and business services sector added 50,000 new positions.

Automakers added 12,000 jobs in June, but the tariffs could weigh on that industry's job growth in the coming months. However, fears of a trade war with other countries, especially China, have many anxious the economy could slow down or shrink in the months ahead.

As IJR previously reported, the economy saw many milestones during Trump's presidency.

Job growth this year has been faster than in 2017.

In fact, if we compare the average wage for the last three months (April, May, and June) with the prior three months (January, February, and March), it appears to be slowing slightly, with an annualized growth rate of just under 2.6 percent.