US payrolls rise less than expected; jobless rate falls

Job growth slows as firms struggle to find workers; signs of labour market tightening

WASHINGTON • US job growth slowed more than expected last month, likely due to companies' struggles to find qualified workers, and the unemployment rate declined, pointing to tightening labour market conditions.

Non-farm payrolls increased by 157,000 last month, the Labour Department said yesterday. The economy created 59,000 more jobs in May and June than previously reported. The economy needs to create about 120,000 jobs per month to keep up with growth in the working-age population.

The unemployment rate fell one-tenth of a percentage point to 3.9 per cent last month, even as more people entered the labour force in a sign of confidence in their job prospects. It rose in June from an 18-year low of 3.8 per cent in May.

Economists polled by Reuters had forecast non-farm payrolls increasing by 190,000 last month and the unemployment rate falling to 3.9 per cent.

The slowdown in hiring last month likely is not the result of trade tensions, which have escalated in recent days, but rather because of a shortage of workers. There are about 6.6 million unfilled jobs in the nation. A survey of small businesses published on Thursday showed a record number in July of establishments reporting that they could not find workers.

The vacancies were concentrated in construction, manufacturing and wholesale trade industries. Small businesses said they were also struggling to fill positions that did not require skilled labour.

The Federal Reserve's Beige Book report last month showed a scarcity of labour across a wide range of occupations, from highly skilled engineers to truck drivers.

The shortage of workers is steadily pushing up wages. Average hourly earnings increased seven US cents (10 Singapore cents), or 0.3 per cent, last month after gaining 0.1 per cent in June. That kept the annual increase in wages at 2.7 per cent in July.

President Donald Trump's administration has imposed duties on steel and aluminium imports, provoking retaliation by the United States' trade partners, including China, Canada, Mexico and the European Union. It has also slapped 25 per cent tariffs on US$34 billion worth of Chinese imports.

Beijing fought back with matching tariffs on the same amount of US exports to China. On Wednesday, Mr Trump proposed a higher 25 per cent tariff on US$200 billion worth of Chinese imports.

Economists have warned that the tit-for-tat import duties, which have unsettled financial markets, could undercut manufacturing through disruptions to the supply chain and put a brake on the strong economic growth.

But a US$1.5 trillion fiscal stimulus, which helped to power the economy to a 4.1 per cent annualised growth pace in the second quarter, is assisting the US in navigating the stormy trade waters.

Manufacturing payrolls rose by 37,000 last month after increasing by 33,000 in June. Construction companies hired 19,000 more workers after increasing payrolls by 13,000 in June. Retail payrolls rebounded by 7,100 last month after losing 20,200 in June.

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 04, 2018, with the headline 'US payrolls rise less than expected; jobless rate falls'. Print Edition | Subscribe