Job Growth in the US Started Rising After Trade War

Jamie Squire  Getty

Jamie Squire Getty

Construction and manufacturing added 21,000 and 17,000 jobs added respectfully.

That print was also more than twice the 102,000 new jobs cited by private sector payroll provider ADP - which correctly predicted last month's big employment whiff.

The Bureau of Labor Statistics reported Friday that the USA economy added 224,000 jobs during the month of June, blowing past estimates for 160,000 jobs. The May jobs report initially reported 75,000 new jobs but later revised the numbers.

Despite the strong job creation in June, wage growth was relatively modest at 0.2%, keeping the annual rate at 3.1%.

Job growth averaged 172,000 per month in the first half. Growth in the services sector, which includes such varied industries as restaurants, finance and recreation, slowed in June. Professional and business services employment gained 51,000 jobs. Wage growth for June was pegged at 0.2 percent overall.

Ahead of the jobs report, federal funds futures contracts were pricing in a 100% chance of a rate cut at the conclusion of the Fed's July 30-31 meeting, with a 29.2% chance of a more aggressive cut of 50 basis points. Prior to 2018, nominal average hourly wage gains had not reached 3 percent since April 2009. Fed chairman Jerome Powell recently indicated that the central bank may take action after global economic uncertainties and ongoing trade worries with China and Mexico. The rate is still down from 63.2% in February, and only modestly above the lowest levels since the 1970s, a time when women were still entering the labor force in greater numbers. While the expansion is the smallest and slowest on record, its consistency is a sign that the post-recession economy has staying power. Fed officials are considering whether their short-term benchmark rate, which has been in a range of 2.25% to 2.5% this year, is curbing economic growth more than they expected and ought to be lowered.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, rose to 7.2% in June from 7.1% in May.

The Dow fell more than 150 points early Friday after the government's report. The Fed's statement came in its semiannual report on monetary policy.

"Net, net, the great American jobs machine restarts its engines after the cautious hiring seen a month ago caused by the escalation in the trade war and rocky financial markets", Mitsubishi UFJ's Chris Rupkey wrote Friday morning. Nevertheless, there has been 18 months of steady jobs growth. That suggests that the unemployment rate will remain near its five-decade low and that the economy will keep growing, even if only modestly.

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