Job Growth Beats Expectations In June, But Pressure Ahead?

The United States economy added more jobs than had been expected in June, with manufacturing gains notable in terms of verticals. Reuters reported Friday that gains in the employment rosters also show traction in inflation, which means that rate increases are still on the horizon.

Economists had a consensus expectation that 195,000 jobs would be added to the economy. The headline numbers show that nonfarm payrolls rose by 213,000 positions in June, per data from the Labor Department. As is standard practice, the data that had been tied to April and May were also revised, with upward momentum, and where the tally gained 37,000 positions.

More people have entered the workforce, which means, even with the aforementioned gains, the unemployment rate was up 20 basis points in its most recent reading to 4 percent. The new entrants to the labor market show confidence in job prospects, reported the newswire. In another set of stats that show some sanguine outlook, the labor force participation rate was 62.9 percent in June versus the May rate of 62.7 percent.

Amid the participation rate, harbingers of inflation include the fact that hourly earnings of private workers were up, albeit a bit less than expected, gaining 20 basis points versus projections of 30 basis points. That takes average hourly earnings growth to 2.7 percentage points on an annual basis.

However, if the Federal Reserve is still on track to raise interest rates (it has done so twice this year), along with a trade war taking shape, consumers may feel the pinch. As noted by CNBC, the average loan on a home that costs $250,000 has risen by more than $100 a month this year alone. Tariffs on lumber sourced from Canada have also added to the cost of housing itself — to the tune of $9,000 per unit.

Might some pressures be coming to bear on the positive outlook expressed in the latest statistics? The same day that the June jobs data came out, tariffs against China took effect and $34 billion of additional tariffs became reality. Large firms, such as GM, have said that job cuts could be in the offing and, this week, the minutes from last month’s Federal Reserve meeting showed that there could be “negative effects on business sentiment and investment spending.”