US hiring soars in June, quieting fears of a slowdown - Kogonuso


Home Top Ad

Post Top Ad

Jul 5, 2019

US hiring soars in June, quieting fears of a slowdown

US job creation roared back to life in June, wiping away fears of a slowdown but calling into question a hoped-for interest rate cut from the Federal Reserve despite months of public pressure from President Donald Trump.

After an unexpectedly weak May, the vigorous June rebound delighted President Donald Trump, who is preparing to seek reelection next year.

"JOBS, JOBS, JOBS!" he wrote on Twitter, claiming credit for record employment levels.

Trump, who recently likened the Fed to a "stubborn child" for dragging its feet on a rate cut to boost the economy, again slammed the central bank.

"Our country continues to do really well," but "If we had a Fed that would lower interest rates, we would be like a rocket ship," he told reporters at the White House.

"But we don't have a Fed that knows what they're doing."

The US economy added 224,000 net new jobs last month, smashing forecasts, according to the Labor Department's closely-watched report.

The unemployment rate ticked up to 3.7 percent as more workers stepped off the sidelines to enter the labor force.

Employers added workers in construction, financial services, education, business services, transportation and warehousing, following a disappointing May when hiring unexpectedly slowed to just 72,000.

But the robust numbers disappointed stock markets, which had been banking on an interest rate cut following a batch of soft economic data and now see that move as less likely.

Some economists argue there is still enough economic uncertainty to warrant an "insurance move" by the Fed, but Wall Street sank into the red after the numbers were released, retreating from Wednesday's record closes. The benchmark Dow Jones Industrial Average closed the day down 0.2 percent.

- Will the Fed disappoint? -

Economist Joel Naroff noted the irony of investors' preference for weak numbers in the belief that a rate cut would prolong the rally in stocks.

"Indeed, there seems to be a perverse view that good is bad and bad is good," he said.

There were some soft spots in the jobs numbers, however. Auto manufacturing employment contracted again, though marginally, meaning it has been down for five of the last eight months.

And the retail sector's woes also continued, shedding another six thousand workers in the fifth straight month of losses.

Even with the latest gains, average job creation in the first half of this year has slowed to 172,000 a month, from 223,000 in all of 2018.

Wage growth in June also fell short of expectations, as average hourly earnings rose 0.2 percent to $27.90 an hour, slower than the 0.3 percent economists had been expecting.

But worker pay was up 3.1 percent compared to the same month last year, and has been at or above three percent for 11 straight months, steadily outpacing inflation and delivering more purchasing power to wage earners.

Meanwhile, more people came off the sidelines to look for work, which pushed the unemployment rate back up to 3.7 percent, still very low by historical standards.

Employers across the country have been complaining for months about the shortage of available and qualified labor, and reporting that they have had to increase benefits and offer more training to retain workers.

The Fed last month opened the door to an interest rate cut amid rising uncertainties about the economy, including Trump's multifront trade conflicts.

Despite Wall Street's fear that the strong job gains could delay a move, economists said the Fed was still likely to cut rates as insurance against a weakening global economy.

Futures markets as of Friday afternoon put the odds of a rate cut this month at 95.1 percent, with at least one more expected as soon as September.

"The economy does not need the Fed to ease but the market continues to scream for action on July 31," Ian Shepherdson of Pantheon Macroeconomics said in a note to clients.

"This Fed won't disappoint."

Join Geezgo for free. Use Geezgo's end-to-end encrypted Chat with your Closenets (friends, relatives, colleague etc) in personalized ways.>>

    No comments:

    Post a Comment

    Post Bottom Ad