The U.S. economy added 213,000 jobs in June, cueing to the growth momentum employers are capitalizing on, despite mounting concerns of a potential global trade war.
While manufacturers opened 36,000 new jobs last month and the education and health sectors contributed 54,000 more, retailers shed 21,600 jobs mainly at general merchandise stores.
Automakers added 12,000 jobs in June, but adverse trade developments could deflate the gain.
Just hours before the monthly reports came out, the Trump administration imposed tariffs on $34 billion worth of Chinese imports, prompting the Asian country to immediately reiterate.
“The tariffs jumble things about what we should expect to see in the next few months,” said Cathy Barrera, chief economist at ZipRecruiter, to the AP.
The job tally, nonetheless, shows the sustained prowess of the economy, which has now maintained 9 years of expansion, the second longest period on record.
It also boosted the U.S. stock indexes, which are expected to reap weekly gains on Friday after 14 days of losses.
The data also shows a modest hourly compensation hike of 2.7 percent last month, compared to a year earlier. 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. The entry of young workers – as opposed by the exit of retiring well-paid baby boomers – presents another cause that keeps wages down.
Market Watch points out that the pay increase is only slightly above the inflation rate, resulting in little purchasing power attainment.
At the same time, unemployment inched up to 4 percent (an increase of 499,000) in June, registering a rise over the previous 18-year low of 3.8 percent. The driving force behind the surge, however, is frictional unemployment, characterized by workers’ confidence to switch jobs in today’s economic climate.
According to Gallup, some 65 percent of Americans believe now is a good time to find a “quality job.” Yet, some companies have already signaled that they would halt their recruitment until a more predictable global trade order emerges.
Economists, however, expect that job gains will continue during the second half of the year, while inflation will remain relatively low due to the largely stagnant wage growth.
With such an outlook, the Federal Reserve would most likely shy away from any abrupt funds rate increase, which would benefit markets that rise when bond rates are low.