WASHINGTON — U.S. employers kept up a brisk hiring pace in June by adding 213,000 jobs in a sign of confidence despite the start of a potentially punishing trade war with China.
At the same time, the unemployment rate rose to 4 per cent from 3.8 per cent, the government said Friday, as more people began looking for a job and not all of them found one.
On the same day that the Trump administration began imposing tariffs on $34 billion in Chinese imports and Beijing hit back with tariffs on the same amount of U.S. goods, the job gain showed that the 9-year old U.S. economic expansion — the second-longest on record — remains on firm footing.
Still, average hourly pay rose just 2.7 per cent in June from 12 months earlier, meaning that after adjusting for inflation, wages remain nearly flat. The low jobless rate has yet to force employers to offer higher wages in order to fill job openings.
One reason that some employers may not be feeling pressure to raise wages is that more people are beginning to look for work, thereby keeping up the pool of job applicants: The ranks of unemployed people seeking jobs jumped by 499,000 in June, which caused the unemployment rate to rise from its previous 18 year-low.
Manufacturers added 36,000 jobs last month; the education and health sector added 54,000. But retailers shed 21,600 jobs, with the losses concentrated at general merchandise stores.
In its report Friday, the government revised up its estimate of job growth in May and April by a combined 37,000. Over the past three months, the economy has produced a robust average monthly job gain of 211,000.
The broader U.S. economy appears sturdy. Economists are forecasting that economic growth accelerated to an annual pace of roughly 4 per cent during the April-June quarter, about double the previous quarter’s pace.
Signs of strength have helped bolster hiring despite the difficulty many employers say they’re having in finding enough qualified workers to fill jobs.
Manufacturers and services firms have said in recent surveys that their business is improving despite anxiety about the tariff showdown between the United States and China. Housing starts have climbed 11 per cent so far this year. Retail sales jumped a strong 0.8 per cent in May in a sign that consumers feel secure enough to spend.
Though economic growth appears to be solid, the gains have been spread unevenly. President Donald Trump’s tax cuts have provided a dose of stimulus this year, but the benefits have been tilted significantly toward wealthy individuals and corporations. Savings from the tax cuts enabled companies in the Standard & Poor’s 500 stock index to buy back a record number of shares in the first three months of 2018.
Yet the tax cuts have done little to generate substantial pay growth. Most economists say they still think the low unemployment rate will eventually force more employers to offer higher pay in order to fill jobs.
The economy also faces a substantial threat from the Trump administration’s trade war with China and from other, ongoing trade disputes with U.S. allies, including Canada and Europe. Any escalation in the conflict with China could disrupt hiring as companies grapple with higher import prices and diminished demand for their exports. On Thursday, Trump floated the prospect of imposing tariffs on more than $500 billion in Chinese imports.
The Trump administration has also applied tariffs on steel and aluminum from allies like Canada and Mexico and has threatened to abandon the North American Free Trade Agreement with those two countries. Trump has also spoken about slapping tariffs on imported cars, trucks and auto parts, which General Motors has warned could hurt the U.S. auto industry and drive up car prices.
Automakers added 12,000 jobs in June, but the tariffs could weigh on that industry’s job growth in the coming months.
Josh Boak, The Associated Press