Strong US jobs growth expected in May, trade tensions a threat

Greg Daco, chief USA economist at Oxford Economics, called the May jobs report "disappointing".

Investors were also encouraged by reports that the impending U.S. tariffs on Mexican goods may be delayed.

Economists had expected 185,000 jobs added in May, with some citing the hiring of potentially tens of thousands of workers for the decennial Census.

As the world's largest economy nears its longest-ever expansion in July, the employment report may amplify rhetoric that Fed rate cuts are needed to support growth. The healthcare sector added 16,000 jobs while construction and manufacturing contributed 4,000 and 3,000 jobs, respectively.

Additionally, the job count for April was revised downward from 263,000 to 224,000, while March's numbers were lowered from 189,000 to 153,000.

The unemployment rate remained near a 50-year low of 3.6% in May. The Indiana unemployment rate is slated to be released June 21. It's nearly like cheering that your effective tax rate is lower because your income got cut in half.

"It's a little bit disappointing but it does not really cause to change our outlook for the year", he said. "We are closely monitoring the implications of these developments for the USA economic outlook and, as always, we will act as appropriate to sustain the expansion". A strong dollar, which makes USA goods costlier overseas, has also slowed the production and export of manufactured goods. For the year ending in April, wages rose by an average of 3.2%.

The tepid employment report added to soft data on consumer spending, business investment, manufacturing and homes sales in suggesting the economy was losing momentum in the second quarter following a temporary boost from exports, inventory accumulation and defense spending.

Meanwhile, Mexico has prepared a list of possible retaliatory tariffs targeting USA products from agricultural and industrial states regarded as Trump's electoral base, a tactic the Chinese regime has also used with an eye toward the Republican president's 2020 re-election bid.

Fannie Mae chief economist Doug Duncan said the slowdown in hiring may be related to trade tensions and a weakening global economy. Last year, GM said it would shed 14,000 workers. That's the part of the economy that's most likely to be impacted by on-going trade frictions with Mexico and China. Private employers added just 82,000 service jobs last month. The labour market thus far has been largely resilient to the trade war with China.

As stocks rallied, the bond market told a more pessimistic story, with investors bracing for a more severe downturn. Those taxes would rise each month until they reach 25% in October unless the Mexican government cuts off a flow of Central American migrants entering the United States from through Mexico.


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