WRAPUP 4-US job growth underscores economy's strength, tariffs a threat
- Author: Eleanor Harrison Jul 10, 2018,
Jul 10, 2018, 2:14
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. It needs to create about 120,000 jobs per month to keep up with growth in the working-age population. The economy has added jobs every month for nearly eight years, the longest streak on record. 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.
Analysts have been puzzled by the consistency of the modest gain in wages irrespective of the growth. Initially, the agency showed a decline in May of 200 jobs as compared with the prior month.
Job openings are at record highs, meaning numerous job seekers are likely to find employment soon. Manufacturing added a healthy 36,000 jobs in June.
The slow growth in labor costs may dissuade the Federal Reserve from raising interest rates more aggressively to head off a spike in inflation. Wage growth remained sluggish, however, and was effectively erased by inflation: average hourly earnings rose just 0.2 per cent to $26.98, putting wages up 2.7 per cent over the same month previous year, the same as the 2.7 per cent rise in the Consumer Price Index.
"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.
"I'm really excited to see that the labor force is growing", said Catherine Barrera, chief economist of the online job site ZipRecruiter.
The report showed that Canada's trade surplus with the US narrowed to $3.3 billion in May, from $3.7 billion April, as more imports headed north across the border and south-bound exports decreased.
Black unemployment remains around historical lows (6.5 percent) after repeatedly breaking records over the past year.
The employment report together with data from the Commerce Department showing the trade deficit narrowed 6.6 percent to a 1-1/2-year low of $43.1 billion in May reinforced expectations of robust economic growth in the second quarter.
Economists had projected that the non-farm payroll would jump by 195,000 while the unemployment rate would remain unchanged at 3.8%, its lowest level since April 2000.
While the unemployment rate slightly increased in June, the number of employed Americans increased to a record high.