US employers kept up a brisk hiring pace in June by adding 213,000 jobs, a sign of confidence in the economy despite the start of a potentially punishing trade war with China.
The report showed that Canada's trade surplus with the USA narrowed to $3.3 billion in May, from $3.7 billion April, as more imports headed north across the border and south-bound exports decreased.
The unemployment rate rose to 4.0 per cent from an 18-year low of 3.8 per cent in June as more people entered the labour force in a sign of confidence in the jobs market. That kept the annual increase in average hourly earnings at 2.7 per cent.
The dollar extended losses against the euro and the yen after the employment report.
Economists had forecast that June would be another strong month for the USA labor market, with nonfarm payrolls expected to have grown by 195,000 during the month with the unemployment rate expected to hold steady at an 18-year low of 3.8%, according to estimates compiled by Bloomberg. Economists surveyed by Bloomberg News had projected the unemployment rate would remain unchanged at 5.8 per cent, which matched the lowest on record. In the chart below, we show two versions of the unemployment rate.
Payroll growth in May was revised up to 244,000 from 223,000 in yesterday's report. Experts predict the move even though the economy is facing significant uncertainty from Canada's intensifying trade dispute with the United States as well as growing fears of a global trade war. "This generates a rising standard of living and strong income growth".
The broader USA economy appears sturdy. Professional and business services, manufacturing, health care, construction, and mining all added jobs in June. The U.S. and China slapped tit-for-tat duties on $34 billion worth of the other's imports on Friday.
The decline in the unemployment rate was driven by an increase in employment; the region added slightly over 10,000 jobs between May and June, according to the federal statistics agency.