Published: Mon, July 09, 2018
Business | By Eloise Houston

The Economy Keeps Adding Jobs, But Filling Them Gets Harder

The Economy Keeps Adding Jobs, But Filling Them Gets Harder

After hitting an 18-year low of 3.8% in May, the unemployment rate unexpectedly ticked up to 4% last month, as the economy added a surprisingly strong 213,000 jobs, according to the U.S. Labor Department.

Buoyant job creation: The U.S. economy continues to be one of the most dynamic job creators in the world, adding 213,000 jobs in June (the median estimate of analysts surveyed by Bloomberg called for a gain of 195,000).

USA employers added a higher-than-expected 213,000 jobs last month, extending the U.S. economy's long-running growth streak. China counteracted with retaliatory tariffs on various USA import, such as soybeans, aircraft, cars and computer chips. Colorado took the No. 1 spot for boasting the highest employment growth rate (3.14%) in the country, as well as the fifth-lowest unemployment rate (2.9%). The unemployment rate nevertheless saw a small uptick.

The latest jobs report, which also contained weaker data points, arrived less than a week before the Bank of Canada's upcoming interest-rate decision next Wednesday.

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.

Still, average hourly pay rose just 2.7 per cent in June from 12 months earlier, meaning that after adjusting for inflation, wages remain almost flat. However, the official figures are yet to be released till later this month. Meanwhile, the labor market seems to be ignoring all concerns raised concerning the new measures. If someone tells the Labor Department surveyors that they have stopped looking for work, the government doesn't count them as unemployed. The unemployment rate edged up to 4 percent, but this was due to a reported surge of 601,000 people entering the labor force. By contrast, annual growth exceeded five percent in twelve out of thirty years from 1950-1980.

The increased participation combined with a lack of accelerating wage growth during June indicates a labor market that still has enough slack remaining to pull in new workers who had been disengaged from the workforce. But retailers cut 21,600 jobs last month, after boosting payrolls by 25,100 in May. This suggests renewed economic optimism among less-skilled or less-educated workers.

Construction payrolls rose by 13,000 last month after increasing by 29,000 jobs in May.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in June. Over the past three months, the economy has produced a robust average monthly job gain of 211,000. Given the flood of new workers, not all who got jobs pushed the unemployment rate up to 4% from 3.8%.

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