The rise in the USA unemployment rate isn’t bad news

Jermaine Castillo
July 7, 2018

The Bureau of Labor Statistics reported the economy added 213,000 jobs in June.

The manufacturing sector helped power the gains, adding 36,000 jobs, but the retail sector shed 22,000 positions. "Over the year, average hourly earnings have increased by 72 cents, or 2.7 percent", BLS said on Friday. The figures for the previous two months were also revised higher.

In a note to clients ahead of the report, Spencer Hill, an economist at Goldman Sachs, said he expected the unemployment rate will fall to 3.7% after being rounded down, a level that would send the headline unemployment rate to its lowest level since 1969. Trump has suggested that more than $500 billion worth of Chinese imports could be taxed in his drive to force Beijing to reform its trade policies, which he insists have unfairly victimized the United States. Additionally, the Trump administration has drawn attention to the record-low of African American unemployment, even as it remained higher than the overall rate at 5.9%.

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The participation rate - the percentage of the working age population employed or actively looking for work - stayed stable at 67.5 per cent. But retailers cut 21,600 jobs last month, after boosting payrolls by 25,100 in May.

Signs of strength have helped bolster hiring despite the difficulty many employers say they're having in finding enough qualified workers to fill jobs.

Though economic growth appears to be solid, the gains have been spread unevenly. "This generates a rising standard of living and strong income growth".

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"He pointed to minutes from the June Federal Open Market Committee, which indicate that some business leaders' "'plans for capital spending had been scaled back or postponed, '" which will likely also affect hiring.

In terms of the larger context, this morning's data points to 1.287 million jobs created so far in 2018, which is evidence of a healthy job market, and which is an improvement on the totals from the first six months of 2016 and 2017.

Trump has also spoken about slapping tariffs on imported cars, trucks and auto parts, which General Motors has warned could hurt the USA auto industry and drive up vehicle prices. Restaurants added 16,400 jobs in June, under the average of 18,400 over the year.

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