Published: Fri, July 05, 2019
Markets | By Otis Pena

Stocks Down Slightly Ahead of Jobs Data

Stocks Down Slightly Ahead of Jobs Data

Wage growth in June was disappointing: Over the past 12 months, wages were up 3.1%, below market estimates of 3.2%, signaling that the economic recovery is still not complete.

The US jobs engine added 224,000 net new positions last month, smashing forecasts, the Labor Department said in the closely-watched report, while the unemployment rate ticked up to 3.7 percent as more workers stepped off the sidelines to enter the labor force.

Including revisions for the months of April and May, the average pace of job growth has been a vigorous 192,000 jobs per month over the past year. The burst of hiring in June may indicate that many employers have shrugged off concerns about weaker global growth, President Donald Trump's trade wars and the waning benefits from US tax cuts.

The June report indicates that robust jobs growth is coupled with consistently strong wage growth.

There is speculation that the Federal Reserve will cut interest rates in July, which will likely catalyse investment and spur continued growth.

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"Although there are drags on the economy in 2019, the expansion should continue through this year", said Gus Faucher, chief economist at PNC Financial Services.

Wages grew 3.1 percent from a year ago in June, down from the 3.2 percent some expected, while the unemployment rate ticked up to 3.7 percent - hovering just above last month's almost 50-year low of 3.6 percent.

"The jobs report showed the economy slowing but not faltering". With more Americans earning steady paychecks, demand for massages and facials has increased, and the company plans to add 60 locations this year and roughly 1,800 jobs. It also remains to be seen what sort of impact this will have on the stock market and the Trump Administration's ongoing trade war with China. That rate cut, expected later this month, could now be in doubt. Consumer spending has solidified.

The pace of the overall economy is widely thought to be slowing sharply from annual growth that neared a healthy 3% previous year. But America's manufacturing sector is slowing along with construction spending. Unemployment will remain around 3.6%, the lowest rate in the decade.

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