Booming US jobs market lifts chance of rate rise

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Nancy Pelosi Trashes June Jobs Report Warns of ‘Brewing Storm’ of Wealth and Opportunity Chip Somodevilla Getty 6 Jul 2018

- USA job growth increased more than expected in June as manufacturers stepped up hiring, but steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases. Hispanic unemployment fell to a record low of 4.6 percent in June, and unemployment remains near record lows for African Americans and for Americans with less than a high school degree. The department also boosted its estimate for April job growth up to 175,000 - up from an earlier assessment of 159,000.

The U-6 unemployment measure-which includes those who have given up searching for work, are marginally attached to the labor force (due to lack of steady employment), and those who are forced to work part-time but would like to work full-time-also moved up by 0.2 percent to 7.8 percent over May's report.

"There's definitely still a lot of room for the labour market to absorb the slack", Kevin Hassett, chairman of the White House Council of Economic Advisers, said on Bloomberg Television.

A CNBC panel called the report "great", "as good as it gets", and "steady as she goes".

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

But in fact more people entering the workforce is a sign of optimism that jobs are available in an economy now entering its 10th year of expansion.

In another sign of vigorous demand for labor, the results for April and May were revised higher by a total of 37,000, bringing the average for the past three months to 211,000. Construction added 13,000 jobs, while retail lost 22,000 - nearly all the jobs it had gained the month before.

Specifically, support activities for mining increased by 4,300 for the month of June while jobs in oil and gas extraction decreased by just 200.

Michael Gapen, chief United States economist at Barclays Plc in NY and a former Fed official, said that the boost in workers coming into the labour market bodes well for pushing down the unemployment rate again.

The slow growth in labor costs may dissuade the Federal Reserve from raising interest rates more aggressively to head off a spike in inflation.

In June, white-collar professional firms filled 50,000 jobs last month to lead the way in hiring while manufacturers added 36,000 jobs.

"Healthy" rise in the unemployment rate: Even though it was expected to decline, the unemployment rate rose to 4 percent from 3.8 percent.

Arriving on the ninth anniversary of the recession's end, the latest jobs numbers cap a string of encouraging economic reports. Average hourly earnings rose 2.7 percent year over year, slightly below expectations of a 2.8 percent increase. "Combined with additional jobs and steady hours, payrolls are up by 5 percent since June 2017".

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