President Donald Trump described newly released unemployment numbers as “yet one more historic milestone.” U.S. employers extended a streak of solid hiring in May, adding 223,000 jobs and lowered the unemployment rate to 3.8 percent.
Hiring slowed in July as employers added 157,000 jobs in a possible sign that worker shortages and widening U.S. trade spats are starting to damp employment gains
The unemployment rate fell from 4% to 3.9%, the Labor Department said Friday.
Economists surveyed by Bloomberg expected 190,000 payroll gains.
As a result of the low unemployment rate, a growing number of businesses are struggling to find workers, especially with the economy growing at the fastest pace in three years in the April-June period. Yet monthly job growth has averaged more than 200,000 this year, up from 182,000 in 2017, in part because the worker-friendly labor market has drawn in more Americans on the sidelines. That also has kept unemployment from falling more quickly.
But many economists believe that shadow labor supply will soon run thin, tempering job growth and pushing unemployment lower.
Meanwhile, President Trump’s tariffs on imports — along with retaliatory duties from China and other countries – may have spurred fears that “forced some businesses to hit the hiring pause button,” said Ian Shepherdson of Pantheon Macroeconomics.
The good news is job gains for May and June were revised up by a total 59,000. The May increase was revised from 244,000 268,000 and the June rise was upgraded from 213,000 to 248,000.
Wage growth holds steady
Average hourly earnings increased 7 cents to $27.05, keeping the annual increase unchanged at 2.7%. Pay increases haven’t accelerated as much as anticipated in light of the historically low jobless rate. But economists expect annual gains to reach reach 3% by the end of the year as unemployment falls further and it becomes even harder for firms to find qualified job candidates.
Faster wage growth could prompt the Federal Reserve to raise interest rates more sharply to head off higher inflation. The unchanged 2.7% rise in June helps keep the Fed on a path of gradual rate hikes.
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