The job numbers for the month of June indicate US manufacturing continues to gain momentum. The unemployment rate rose to 4 percent, the Labor Department said June 6. In spite of healthy job growth, wage growth is especially weak in manufacturing, rising just 1.7 percent over the past year.
"The underlying fundamentals have been strong for quite some time and while we were a little surprised by the uptick in the unemployment rate, it appears to be caused by additional workers entering the labor force, which is a positive", Bedikian said. In general, monthly payroll gains of around 100,000 - or even a bit less - are sufficient to keep pushing down the unemployment rate, according to economists.
The overall picture is again one of a strengthening labor market, but one that is still not tight enough to produce substantial wage growth.
Altogether, 285,000 new jobs have been added in the manufacturing sector in the past year.
The economy continues to show many signs of strength despite the brewing trade war.
Michael Gapen, chief United States economist at Barclays Plc in NY and a former Fed official, said that the boost in workers coming into the labour market bodes well for pushing down the unemployment rate again.
In addition, the data should encourage the Federal Reserve to hike interest rates at least once more this year (with the balance of risks tilting toward two hikes).
Construction payrolls rose by 13,000 last month after rising by 29,000 jobs in May.
According to the BLS report, titled "The Employment Situation-June 2018", total nonfarm employment increased by 213,000 in June.
Among industrial sub-sectors, the three standouts for jobs improvement in June were: "education and health services", +54,000; "professional and business services", +50,000; and in a long-time-coming and pleasantly-welcome development, "manufacturing", +36,000. A separate measure, average hourly earnings for production and nonsupervisory workers, also increased 2.7 percent from a year earlier, unchanged from the prior month's gain. That tepid increase to an average of $26.98 per hour, however, is due to the disproportionately high number of positions filled by job seekers with high-school diplomas, who generally receive lower wages.
"Pay hikes haven't picked up as much as anticipated in light of the historically low jobless rate, but economists expect annual gains to reach 3 percent by the end of the year", USA Today said. However, Treasury yields are weaker as Average Hourly Earnings came in soft.