US adds solid 164k jobs, but business investment falling

WASHINGTON • Although US employers slowed their hiring last month, they added a still-healthy 164,000 jobs to an economy that appears poised to extend its decade-plus expansion.

The unemployment rate remained at 3.7 per cent for a second straight month, the Labour Department reported yesterday.

The pace of hiring has slowed this year as a growing share of Americans already have jobs. The three-month average for job gains was 140,000, down from 237,000 a year ago.

The US economy has faced some tumult as President Donald Trump has escalated his trade conflict with China. Still, the American economy's overall growth, along with consumer spending, has been solid.

However, business investment has been declining, home sales have weakened and manufacturers have shown signs of struggling.

Despite the economy's overall resilience, the Federal Reserve on Wednesday cut its benchmark interest rate for the first time in a decade to try to counter the impact of President Trump's trade wars and global weakness.

 

  • 2.1%

    GDP growth in the US for the April-June quarter, down from 3.1% in the January-March period.

On Thursday, Mr Trump announced plans to tax an additional US$300 billion (S$413 billion) of Chinese imports beginning next month.

Though it is growing consistently, the economy appears to be sliding into a slower phase.

The gross domestic product (GDP) - the total output of goods and services produced in the United States - grew at a decent if unspectacular 2.1 per cent annual rate in the April-June quarter, down from a 3.1 per cent pace in the January-March period.

Consumer spending increased at a 4.3 per cent annual rate and helped propel much of the growth. But business capital investment declined for the first time in three years, a likely sign that Mr Trump's aggressive use of tariffs against China and other countries has slowed corporations' expansion plans.

Pay gains also appear to have stalled, even though lower unemployment has historically boosted worker pay. Wages and benefits have risen 2.7 per cent over the past 12 months, down slightly from the 2.9 per cent gain for last year, the Labour Department said.

Home sales have fallen as high prices have kept many people out of the market despite the benefits of low mortgage rates and job gains. Sales of existing homes have tumbled 2.2 per cent over the past 12 months, according to the National Association of Realtors.

Factories have also been coping with a slowdown. In part, that is because the global economy has weakened and Mr Trump's tariffs on hundreds of billions of dollars' worth of goods - and threats to add more - have disrupted supply chains.

The Fed said that manufacturing output has improved slightly by just 0.4 per cent from a year ago, after having declined over the past six months.

There are signs, though, that consumers are optimistic. The Conference Board's index of consumer confidence last month reached its best reading since last November. A higher percentage of Americans anticipate pay rises in the next six months.

Indeed, spending at restaurants and bars has increased 4.2 per cent year to date, according to government reports.

And while traditional retailers have faced hardships, online stores have prospered. Non-store retailers have enjoyed a 10.6 per cent jump in sales.

ASSOCIATED PRESS

A version of this article appeared in the print edition of The Straits Times on August 03, 2019, with the headline 'US adds solid 164k jobs, but business investment falling'. Print Edition | Subscribe