Dollar falls after USA nonfarm payrolls report, tariffs kick in

This month's Employment Situation Report from the Bureau of Labor Statistics showed strong job creation, but the unemployment rate rose 0.2% to 4.0%, in an unexpected result.

Economists were forecasting that June was another strong month for the USA labor market, with nonfarm payrolls expected to have grown by 195,000 during the month with the unemployment rate holding steady at an 18-year low of 3.8%, according to estimates compiled by Bloomberg.

One area that remains sluggish is wage growth, which grew 2.7% when compared with the same period past year.

The job growth shows the labour market shrugging off worries about a slowdown triggered by trade fights or rising borrowing costs.

The June jobs report has a lot of rosy details in it.

Canada's tight jobs market is beginning to bring more workers into the labour force, a trend that if sustained may moderate a recent pick up in wage pressures. 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. While 12.4 percent is still high for this recovery, it is well below the rates of more than 14 percent seen the last time the unemployment rate was this low in 1999 and 2000. But retailers shed 21,600 jobs, with the losses concentrated at general merchandise stores.

Signs of strength have helped bolster hiring despite the difficulty many employers say they're having in finding enough qualified workers to fill jobs. This was most due to a 1 percentage point rise in the unemployment rate for black women, although their EPOP also rose by 0.6 percentage points. Housing starts have climbed 11 percent so far this year.

Yet the tax cuts have done little to generate substantial pay growth.

The U.S. economy faces potential drags going forward, including escalating trade disputes with major trading partners such as the European Union, China, Canada and Mexico.

Following the report, USA stock turned positive after having been in red figures ahead of the report.

Vanessa Coleman

Comments