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USA: Net rebound of job creations, wages lag behind

224,000 non-agricultural jobs created (consensus 160,000). The unemployment rate rose slightly to 3.7% (3.6% in May). The increase in hourly wages slows to 0.2% (+ 0.3% in May).

WASHINGTON – Employment growth in the United States rebounded strongly in June, but a moderate rise in wages and other signs of a slowing economy could continue to encourage the Federal Reserve to lower interest rates this month.

The Labor Department’s highly anticipated monthly report, released on Friday, suggests that the sharp slowdown in hiring in May was probably fortuitous.

But the lack of concrete progress in negotiations to end the US-China trade war means the Federal Reserve could set the bar high to give up on lowering rates at its next monetary policy meeting July 30th and 31st.

“Today’s numbers should not prevent the Fed from easing its policy at this month’s meeting,” said Jim O’Sullivan, chief economist at High-Frequency Economics. “The announced easing reflects fears that trade-related uncertainties and inflation below 2% will act as a drag on growth.”

The United States created 224,000 non-agricultural jobs in June, the highest level in five months, while economists polled by Reuters forecast 160,000.

The US economy, on the other hand, created 11,000 fewer jobs in April and May than initially announced.

Job creation averaged 172,000 per month in the first half of the year, down from 223,000 in 2018. However, this pace remains well above the threshold of 100,000 monthly job creations deemed necessary to absorb the growth of the economy. the population of working age.

The pace of wage growth has slowed compared to the end of last year, which was at its highest level in a decade. The increase in the average hourly wage was six cents last month, or 0.2%, against + 0.3% in May, and its increase over one year remained at 3.1% for the second month in a row. The market forecast a rise of 0.3% month-on-month and 3.2% year-on-year.

LESS PRESSURE ON THE EDF

The unemployment rate, calculated on the basis of a separate survey from that measuring employment, increased to 3.7% with the arrival of new job seekers, compared to 3.6% in May.

A broader measure of unemployment, which includes people who want to work but have dropped out of work, and those who work part-time because they can not find a full-time job, is on the rise. , 2% in June, compared to 7.1% in May.

Job growth has slowed in part because employers are struggling to find skilled workers.

Hiring resumed in almost all sectors in June, although employment in distribution contracted for the fifth consecutive month.

The only manufacturing sector, most exposed to the impact of current trade tensions between the United States on the one hand, and China and Mexico on the other, created 17,000 jobs in June, after only 3,000 in May. Private sector total creations reached 191,000 against 83,000 in May.

In construction, 21,000 jobs were created in June, up from 5,000 in May. Creations in the public sector picked up again, at a rate of 33,000, after 11,000 destructions in May.

In the markets, the 10-year US yield boosted its gains after the statistic, taking more than 10 basis points (bps) to nearly 2.07% around 14:45 GMT, as the good jobs figures suggest that Fed should not be as aggressive as expected in lowering rates.

The market still rates the probability of a rate hike at the end of the month at 100%, but a now overwhelming majority is counting on a cut of just 25 bps from the fed funds target, according to CME Group’s FedWatch barometer.

In the same way, the dollar increased its growth and took almost 0.7% against a basket of reference currencies, making the euro fall below the $ 1.122 mark.

Wall Street has opened in decline, after these figures that hold back the hope of an aggressive rate decline in late July.

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