US Job Creation Data Disappoints
According to the US Department of Labor, the US economy managed to create 130000 jobs in August. The figure came in below the anticipated figure of 158000 and was well down on the July figure of 159000 and will add fuel to the arguments of those who think that the US economy is slowing. This, in turn, is bound to increase the pressure coming from White House on the Federal Reserve to cut rates as a mechanism to stimulate the economy.
Despite the disappointing job creation figure, the official level of unemployment remained unchanged at 3.7%, below the 5% level that many economists say constitutes effective full employment. In the year to August, wages picked up by 3.7% which is above the official inflation level which currently stands at 1.8% (July). Nominally, this means that Americans have a little more disposable income than a year ago.
The August job creation data included 25000 temporary government employees who will help with the US census. The health care sector, business services and professional services were all fields enjoying a boost in August.
The job creation figure for June and July were overestimated by 20000 new jobs.
The domestic strains of Trump’s trade war with China is affecting the US economy and is exacerbating the effects of a general slowing in global trade, but the President appears to be deaf to criticisms of his policy for the moment. Whilst charging heavy tariffs on Chinese imports makes Chinese goods more expensive in the US market, it is US consumers and businesses that must pay them.
It is widely expected that the Federal Reserve will cut rates when it meets later this month, but any decline is likely to be modest and not the “substantial” rate cut that President Trump has been Tweeting about.