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US jobs growth stronger than expected

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US car workerImage source, Getty Images

US employers added a higher-than-expected 213,000 jobs last month, extending the US economy's long-running growth streak.

The manufacturing sector helped power the gains, adding 36,000 jobs, but the retail sector shed 22,000 positions.

The unemployment rate ticked up to 4% from 3.8%, as the strong labour market encouraged more people to look for work.

However, the annual increase in average hourly earnings was unchanged at 2.7%.

Trade row

The US has added jobs every month for more than seven years, but analysts have warned that deepening trade disputes could threaten growth, while rising borrowing costs might dampen economic activity.

On Friday, the US and China each imposed new tariffs on $34bn worth of the other country's goods.

However, so far, the labour market appears to be shrugging off concerns about those measures.

In addition to the 213,000 jobs added in June, the Labor Department said there were 37,000 more jobs created in April and May than previously estimated.

Over the past three months, US has added an average of 211,000 jobs per month - well above the gains needed to accommodate population growth and almost 20,000 more than the average last year during the same period.

The figures are likely to build further confidence in the US economy, which has already been doing well.

Economists estimate that GDP growth hit an annual pace of 4% or higher in the second quarter, though official figures are not due until later this month.

Image caption,

US unemployment rate

The persistence of relatively modest wage gains despite the growth has puzzled analysts, who say firms should be willing to pay more as the economy heats up and competition for workers increases.

As of April, there were about 6.7 million job openings in the US - more than the number of people who do not have a job but are looking for work.

"This is a painfully slow acceleration," wrote Ian Shepherdson of Pantheon Macroeconomics.

Even without more significant wage gains, however, the strong job market appears to be pulling people from the sidelines.

The labour force - the pool of people working or looking for work - rose by 601,000 in June, the biggest increase since February.

More than 200,000 of those people were re-entering the labour force - the greatest number since 2014.

"Given the economic momentum, we see gradually firming wages, steady labour force participation, and a falling unemployment rate to persist in the second half of 2018," said Satyam Panday of S&P Global Ratings.