United States job growth slowed sharply in May and wages rose less than expected, raising fears that a loss of momentum in economic activity could be spreading to the labour market, which could put pressure on the Federal Reserve to cut interest rates this year.
Trump said on June 7 there's a "good chance" an agreement could be reached, which also seems to have been reflected in the stock market gains.
President Donald Trump has put a 25 percent tariff on $250 billion of annual Chinese imports and, on June 6, said he'll make a decision after the G20 Summit in late June on whether to expand the tariffs to another $300 billion worth of products. That would be well above the roughly 100,000 needed per month to keep up with growth in the working-age population. That reading is wide of the 185,000 jobs that economists polled by Reuters were expecting, and well short of the roughly 100,000 jobs needed to absorb new entrants into the U.S. labour force.
Manufacturing payrolls will be watched closely for signs of any fallout from the trade tensions.
Cardillo said trade tensions may have made companies more hesitant to hire. The employment report has a significant impact on Federal Reserve policy decisions because jobs growth is central to the bank's mandate. Average wages rose 3.2 percent in April compared with a year ago, a solid if not exceptional gain.
The dollar fell to a 2-1/2-month low against a basket of currencies, while US Treasury prices rose. A lack of wage pressure indicates that employers aren't as desperate for workers as they often say they are.
While the steady wage growth would support the Fed's optimism that inflation would return to the US central bank's 2% target, economists said that was likely to take a backstage to the uncertainty wrought by the trade tensions.
Larry Adam, chief investment officer at Raymond James, said that the Dow Jones will be more influenced by the US-Mexico trade talks than the Fed reducing interest rates. It hasn't raised, or cut, the interest rate target range at any meeting so far this year.
Home sales have also been weak this year despite a sharp drop in mortgage rates. Still, it's below last year's pace of 225,000. The economy grew at a 3.1% pace in the first quarter. The Labor Department said Friday that the unemployment rate remained at a almost 50-year low of 3.6%.
The hiring gains last month were the fewest since February.
The participation rate in the labour force, the proportion of Americans who are employed or looking for a job, did not change and continued at 62.8 per cent, the same level as in April.
Employment gains in May slowed across all sectors.
This week's ADP jobs report for May, which is separate from the monthly Bureau of Labor Statistics report, showed just 27,000 new jobs. Government payrolls are forecast increasing by at least 10,000 jobs in May, but hiring for the 2020 Census is a wild card to the estimate.