February 26, 2021

USA exceeds expectations in June with solid job creation

The United States economy exceeded expectations in June with a solid job creation, registering 224,000 new jobs, in a month in which the unemployment rate, however, grew one tenth to 3.7%, reported this Friday the Government.

The good data of new jobs of this month counteracts with the slowdown recorded in May, when the 75,000 jobs created generated concern about a possible weakening of the labor market.

However, the US economy continues at a level close to full employment, and the creation of 224,000 new jobs shows the recovery of dynamism, above the prospects of analysts, who had anticipated some 170,000.

Despite the progress recorded, the unemployment rate increased slightly – one tenth – to 3.7% in June, although it remains at a very healthy level and close to full employment.

Although it may seem contradictory, sometimes a rise in the unemployment rate can be registered when the creation of jobs increases, because more people than before neither worked nor actively sought employment, they decide to trace the labor market encouraged by the improvement of the economic situation .

The average salary, in turn, rose in June by 6 cents per hour, to $ 27.90.

In the last 12 months, salaries have increased by 3.1%, the same level as that registered in the past month.

On the other hand, the participation rate in the labor force, that is, the proportion of Americans who are employed or looking for a job, improved slightly to 62.9%, one tenth of over May.

This has been the 105th month in which employment grows consecutively in the United States, the longest successful bonanza in the labor market.

However, the Federal Reserve (Fed) has reiterated that it will be "patient" in the face of future increases in interest rates for the remainder of the year, currently between 2.25% and 2.50%.

The unemployment data adds pressure ahead of the Fed meeting on July 30 and 31, after the central bank was open to consider a possible drop in the price of money in the face of concerns over trade tensions with China.

Some analysts have predicted that these data will lead the Fed to a cut in interest rates, although others believe that the president of the agency, Jerome Powell, could delay it until the next meeting.

"The improvement reflects concerns about potential drag on growth due to trade-related uncertainties, along with inflation below 2% .The report increases the likelihood that the cut will be 25 instead of 50 basis points." , said the chief economist of the HFE consultancy, Jim O'Sullivan, in a statement.

US President Donald Trump has repeatedly pressed the Fed by insisting that the central bank should reduce the price of money to support economic activity, adopting a position not common among the country's leaders.

His chief economic adviser, Larry Kudlow, has even suggested that the Fed should cut interest rates by 50 basis points.

After knowing the unemployment report, Wall Street opened with losses and the Industrial Dow Jones, its main indicator, was down 0.46% minutes after the start of the session, while the selective S & P 500 was down by 0.60% and the composite index of the Nasdaq market lost 0.61%.

Alex Segura Lozano

(tagsToTranslate) USA (t) exceeds (t) expectations (t) solid (t) creation

Source link