United States unemployment rate rises unexpectedly to 4.0% | 6 July 2018

Ivan Schwartz
July 9, 2018

The U.S. legal industry added 4,800 jobs in June as the country's overall economy continued an uninterrupted streak of monthly job growth, according to U.S. Labor Department data released Friday. With these revisions, employment gains in April and May combined were 37,000 more than previously reported.

The U-6 or underemployment rate rose to 7.8 percent from 7.6 percent; the gauge includes part-time workers who'd prefer a full-time position and people who want a job but aren't actively looking.

Although average hourly wages grew 2.7% in June from a year ago, they didn't change much from May and came in below economists' expectations.

Nonetheless, the U.S. jobs market is incredibly hot right now with yesterday's NFIB jobs survey suggesting that in the small business sector, the proportion of firms looking to hire workers has been higher on only three occasions in the past 45 years.

Employment gains were broad-based as the private sector added 202,000 jobs, and federal, state and local governments added 11,000. "This combined with labor force unemployment rates being among the lowest in the USA results in western states ranking so well".

Canada received a dose of new jobs last month, maintained sturdy wage growth and saw more people searching for work - all seen as positives by experts who believe the path is clear for the central bank to raise interest rates next week.

Most economists agreed the uptick in the unemployment rate is the result of volatile figures used in the calculations.

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Michael Gapen, chief U.S. 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 rise in unemployment isn't as bad as it seems, said Mark Hamrick, a senior economic analyst for Bankrate.com.

In June, white-collar professional firms filled 50,000 jobs last month to lead the way in hiring while manufacturers added 36,000 jobs. It is expected to hover around its target for a while, in part because of labor market tightness. This extra labour supply has seemingly helped keep wage growth in check.

MA is the third best state to be looking for work, since job hunters enjoy 30 weeks of unemployment insurance; longer than any other state.

Black unemployment remains around historical lows (6.5 percent) after repeatedly breaking records over the past year. By contrast, in the previous year the unemployment rate has fallen by 0.4 percentage points for workers with just a high school degree, by 0.5 percentage points for workers with some college or an associate degree, and a full percentage point for workers with less than a high school degree.

Jim O'Sullivan, chief USA economist at High Frequency Economics, said gains have averaged 215,000 month so far this year, up from 182,000 "more than strong enough to keep the unemployment rate trending down over time". It has declined three-tenths of a percentage point this year and is near the Fed's estimate of 3.6 percent by the end of this year.

Strong jobs growth continues at a time when the economy is growing 4%, and inflation is about to break 3%.

Other reports by GizPress

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