Published: Tue, June 11, 2019
Finance | By Kristine Clayton

Solid US jobs report could allay fears of weakening economy

Solid US jobs report could allay fears of weakening economy

The disappointing data heightened expectations for the Federal Reserve to ease policy, with senior policymakers suggesting this week they could cut rates if the economic outlook soured.

Walmart chief executive Doug McMillon said Friday, before Trump's announcement, that the iconic retailer is "concerned" about Mexican tariffs causing fruit and vegetable prices to spike for USA consumers.

"Seventy-five thousand net new jobs in May is not as strong as in prior months, but nonetheless implies continued economic expansion and solid consumer confidence", Yun said. "Given the mounting pressure from tariffs, market volatility, slowing economic growth internationally and hazy forecasts for interest rates, businesses understandably feel less confident about the environment they will be operating in", Steve Rick, chief economist at CUNA Mutual Group, said in an email.

"The May jobs report will add to worries that the domestic economy is slowing", Hicks said.

Additionally, the job count for April was revised downward from 263,000 to 224,000, while March's numbers were lowered from 189,000 to 153,000.

The jobless rate held at a 49-year low of 3.6 per cent while average hourly earnings climbed 3.1 per cent from a year ago, less than projected. Stocks on Wall Street were trading higher.

"The slowdown is really coming from the sectors that are most susceptible to trade tensions like manufacturing, construction, mining and logging".

Fed chairman Jerome Powell acknowledged on Tuesday that the central financial institution used to be carefully monitoring the implications of the change tensions on the financial system and would "act as applicable to shield [economic] expansion".

A strong dollar, which makes United States goods costlier overseas, has also slowed the production and export of manufactured goods.

In the last 12 months, wages have increased by 3.1 per cent.

Hiring cooled off considerably in May in what could be a warning sign that the US economy is slowing down.

Hiring across most sectors was lower in May.

Automakers are cutting jobs and production as USA sales have slowed. But private employers added just 82,000 service jobs in May, less than half the number of the month before.

The Trump administration's trade disputes with Mexico and China, the biggest trade partners to the U.S., remain a huge wildcard for investors of all stripes.

The labor force participation rate remained the same and the share of people who can't find enough hours or stopped looking for work decreased to 7.1%, nearing the lowest level on record, 6.8% in October 2000. Retail sales, factory output and home purchases have shown the economy struggling this quarter after better-than-expected growth in the first three months of the year. Those jitters could explain why hiring has been volatile over the last several months.

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