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United States jobs report shows higher unemployment rate, more jobs than forecast

08 July 2018

The economy has now been adding jobs for almost eight years - its longest streak on record.The U.S.is considered at near full employment, and the biggest challenge in the job market is the lack of available workers - a record 6.7 million jobs remain unfilled.

The Labor Department has said that apart from the additional 213,000 jobs in June, another 37,000 extra jobs were created in April and May, which was again more than the estimates.

"We may be heading into a trade war but the good news is, the economy at least seems to have some good momentum", said Michael Feroli, chief United States economist at JPMorgan Chase & Co "We still have some capacity to grow above trend without triggering too much inflation worry". "Similarly, it should ease the concerns of the hawks (at the Fed) who worry that the Fed's rate hike campaign is behind the curve".

Signs of the Trump administration's trade war with China and did not show up in the report.

The unemployment rate rose to 4 percent, the Labor Department said June 6. That was the first increase in the jobless rate in 10 months.

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The U.S. economy posted another month of solid employment growth in June and the labor force swelled as workers came off the sidelines to look for jobs. With upward revisions to the data from the prior two months, the average gain over the last three months was 211,000. That kept the annual increase in average hourly earnings at 2.7 percent.

While economists say the tax cuts are boosting growth this year, they warn that Trump's actions on trade could have damaging impacts on the economy and jobs.

Amid news of May's record-low unemployment rate, House Minority Leader Nancy Pelosi (D-Calif.) shifted attention to allegedly stagnant wage growth under Trump.

Black unemployment rose to 6.5 percent from a record low of 5.9 percent; the Hispanic rate fell to a record low of 4.6 percent. Economists expect inflation will hover around its target because of labor market tightness. "However, the ongoing trade war with China and our allies could hurt investment spending and hold back job and wage gains".

It also boosted the USA stock indexes, which are expected to reap weekly gains on Friday after 14 days of losses.

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The long-in-the-tooth nature of the current boom cycle, generally rising interest rates and foreign trade conflicts are among the reasons investors have been leaving major stock market indices around the world in neutral this year.

In addition, this report's less-favorable indicators - relatively sluggish wage growth and a higher unemployment rate due to increased labor-force participation - keep open the possibility of further enhancements to both the demand and supply drivers underpinning a continued expansion that is stronger and more inclusive.

Minutes of the Fed's June 12-13 policy meeting published on Thursday offered an upbeat assessment of the labor market.

Economists have estimated that 195,000 jobs were added last month and that the unemployment rate remained at an 18-year low of 3.8 per cent, according to data provider FactSet.

Payroll growth in May was revised up to 244,000 from 223,000 in yesterday's report.

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United States jobs report shows higher unemployment rate, more jobs than forecast