Washington DC, Sept 7, 2018 – U.S. job growth accelerated in August, with wages notching their largest annual increase in nine years, strengthening views the economy was so far weathering the Trump administration’s escalating trade war with China.
Non-farm payrolls surged by 201,000 jobs last month, boosted by hiring at construction sites, wholesalers and professional and business services, the Labor Department said on Friday. The economy needs to create 120,000 jobs per month to keep up with growth in the working-age population.
Average hourly earnings increased 0.4 percent, or 10 cents in August after rising 0.3 percent in July. That raised the annual increase in wages to 2.9 percent in August, the largest increase since June 2009, from 2.7 percent in July.
Strengthening wage growth underscores tightening labor market conditions and cements expectations for a third interest rate increase from the Federal Reserve this year when policymakers meet on Sept. 25-26.
The unemployment rate was unchanged at 3.9 percent in August. But a broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell one-tenth of percentage point to 7.4 percent, the lowest level since April 2001.
Economists polled by Reuters had forecast non-farm payrolls increasing by 191,000 jobs last month and the unemployment rate falling to 3.8 percent. The economy created 50,000 fewer jobs in June and July than previously reported.
Analysts say the administration’s $1.5 trillion tax cut package and increased government spending were shielding the economy from the trade tensions, which have also seen Washington engaged in tit-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.
They also note that the import duties implemented so far have affected only a small portion of the American economy, but warned this could change if President Donald Trump pressed ahead with additional tariffs on Chinese imports.
The United States and China have slapped retaliatory tariffs on a combined $100 billion of products since early July.
Americans had until Thursday to comment on a list of $200 billion worth of Chinese goods widely expected to be hit with tariffs soon. The government imposed import duties on goods including steel, aluminum, washing machines, lumber and solar panels early this year to protect American industries from what Trump says is unfair foreign competition.
Global outplacement firm Challenger, Gray & Christmas said on Thursday there were 521 tariff-related job cuts in August, but these were largely offset by the hiring of 359 workers by steel producers.
The employment report added to manufacturing and services industries surveys in suggesting the Trump administration’s protectionist trade policy was having a marginal impact on the economy for now. The economy grew at a 4.2 percent annualized rate in the second quarter, almost double the 2.2 percent pace set in the January-March period.
Job gains in August were almost across all sectors, though manufacturing payrolls fell by 3,000. That was the first drop since July 2017 and followed an increase of 18,000 in July. Construction companies hired 23,000 more workers last month. They increased payrolls by 18,000 jobs in July. – Reuters