Tuesday, 25 September, 2018

How the higher unemployment rate is actually a good sign

Nellie Chapman | 07 July, 2018, 07:48

The dollar fell on Friday after data showed the US economy created more jobs than expected in June, but a closely-watched inflation gauge - wage growth - rose less than forecast, while the unemployment rate increased. Professional and business services, manufacturing, health care, construction, and mining all added jobs in June.

But wage growth is still weak - an increase of just 5 cents an hour in June.

The job growth shows the labour market shrugging off worries about a slowdown triggered by trade fights or rising borrowing costs.

The monthly labour force report was released Friday and showed 2,300 full-time jobs were lost last month.

Policymakers at the Federal Reserve, the U.S. central bank, monitor the report because they can raise interest rates when employment is close to full, wages are rising healthily and unemployment is low. Trump has suggested that more than $500 billion worth of Chinese imports could be taxed in his drive to force Beijing to reform its trade policies, which he insists have unfairly victimized the United States.

The June jobs is out and it's a beat.

The lack of wage growth is disappointing, but still higher than the rate of inflation, said Douglas Holtz-Eakin, president of the American Action Forum. Some economists project economic output rose at better than 4% annual pace in the second quarter for the first time since 2014.

The participation rate - the percentage of the working age population employed or actively looking for work - stayed stable at 67.5 per cent.

The economy also faces a substantial threat from the Trump administration's trade war with China and from other, ongoing trade disputes with USA allies, including Canada and Europe. Restaurants added 16,400 jobs in June, under the average of 18,400 over the year.

Rose warned the city's unemployment rate could be slower to drop in the coming months because Edmontonians who were too discouraged to previously search for employment were more likely to resume that search.