USA hiring topped forecasts in June while unemployment rose from an 18-year low and wage gains unexpectedly slowed, indicating the labour market is still absorbing spare capacity.
The big story in Friday's report, however, was the increase in labor force participation, which rose from 62.7% in May to 62.9% in June. The bank's overnight rate target is 1.25 per cent.
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.
The mixed signals of rising unemployment amid continued hiring could strike a flat note at the White House as President Donald Trump has repeatedly taken credit for the historic low levels of unemployment.
Wage numbers again disappointed, with average hourly earnings up just 2.7% year over year, one-tenth of a percentage point below expectations.
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The central bank raised the benchmark lending rate last month, and is expect to hike twice more this year. The United States is now in a trade war with all its top five trading partners: China, Canada, Mexico, the European Union and Japan.
Although the report for June was far from uniformly strong, it will reinforce the perception that the USA will continue to outpace other countries and should be able to navigate trade policy uncertainties as long as they don't lead to a full-blown global trade war.
The report also shows that the share of workers who have multiple jobs remained stable over the a year ago at 4.8 percent. The increase was driven by 284,100 new full-time positions. "A disappointing number would not be a sign of weakness, other than in labor supply".
While the unemployment rate slightly increased in June, the number of employed Americans increased to a record high.
Several measures showed that the labour market still has slack to absorb.
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"It remains to be seen if a rebound in the private sector will occur given growing trade uncertainties".
Construction added 13,000 jobs, while retail lost 22,000 - nearly all the jobs it had gained the month before.
Manufacturers added 36,000 jobs last month.
TD senior economist Brian DePratto wrote in a note Friday that the "employment mix could have been a bit healthier, but it certainly could have been worse too". The unemployment rate nevertheless saw a small uptick. Before joining The Washington Post, she was a senior economics reporter at CNN and a columnist and deputy editor at the Patriot-News in Harrisburg, Pa. The worldwide trade deficit was about $1.9 billion in April and $3.9 billion in March. This was consistent with sectoral data pointing to a more dynamic manufacturing sector among others. So, taking this all together we have a U.S. economy growing at around 4% in the current quarter, that has an incredibly tight labour market with headline consumer price inflation potentially rising to 3% next week.
Exports declined mostly because of weaker trade on motor vehicles and parts as well as metal ores and non-metallic minerals.
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