US job growth slows, trade deficit widens

An applicant looks at available positions listed for a hotel at a job fair in Sunrise, Florida. (AP Photo)

WASHINGTON: US job growth slowed more than expected in July, as companies appeared to struggle to find qualified workers and the unemployment rate declined, pointing to tightening labour market conditions.

The jobs data released on Friday followed a report that the US trade deficit widened in June for the first time in four months as exports fell and imports grew. Politically sensitive trade gaps with China, Mexico and Canada all increased, potentially setting the stage for even more sabre-rattling tweets from President Trump.

Nonfarm payrolls increased by 157,000 positions last month, the Labor Department said. 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 point to 3.9% in July, 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% in May.

In its trade report, the Commerce Department said the US deficit in goods and services rose 7.3% to $46.3 billion in June from $43.2 billion in May. The value of US exports slid 0.7% to $213.8 billion; imports rose 0.6% to $260.2 billion, led by increases in medicine and crude oil.

The United States ran goods deficits in June of $33.5 billion with China, up 0.9% from May; $7.4 billion with Mexico, up 10.5%; and $2 billion with Canada, up 39.7%.

In the first half of the year, the trade deficit totalled $291.2 billion, up 7.2% from the first half of 2017.

The slowdown in hiring, however, is not believed to be the result of trade tensions, but rather because of a shortage of workers. There are about 6.6 million unfilled jobs in the country. A survey of small businesses published on Thursday showed a record number of establishments reporting they could not find workers.

According to the NFIB, 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, including highly skilled engineers, specialised construction and manufacturing workers, information technology professionals and truck drivers.

The shortage of workers is steadily pushing up wages.

Average hourly earnings increased seven cents, or 0.3%, in July after gaining 0.1% in June. That kept the annual increase in wages at 2.7% in July.

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

There have also been concerns that the trade tensions could dampen business confidence and lead companies to shelve spending and hiring plans. But a $1.5-trillion fiscal stimulus, which helped to power the economy to a 4.1% annualised growth pace in the second quarter, is assisting the United States in navigating the stormy trade waters.

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

Government employment fell by 13,000 jobs in July. There were declines in transport, utilities and financial payrolls last month. 

Article source: https://www.bangkokpost.com/business/news/1515218/us-job-growth-slows-trade-deficit-widens

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