Friday brought a mixed economic picture for the United States: On the one hand, a new jobs report showed hiring was up, with 224,000 jobs added in June.
On the other hand, stocks dipped in the morning, with the Dow Jones Industrial Average dropping 150 points on news that the Federal Reserve could cut interest rates this month, though the strong jobs report could make that less likely.
President Donald Trump tweeted out reports by conservative news sources celebrating the jobs report:
JOBS, JOBS, JOBS! https://t.co/lWqvRNJDOW
— Donald J. Trump (@realDonaldTrump) July 5, 2019
“Record 157,005,000 Employed; 19th Record of Trump Era” https://t.co/syROOk1UOb
— Donald J. Trump (@realDonaldTrump) July 5, 2019
Indeed, with unemployment at 3.7 percent and the average hourly wages rising 3.1 percent from the previous year, the picture looks rosy. But things are more complicated than that.
May’s sluggish jobs report had analysts worried that the end of the boom was nigh, as the trade war with China and Trump’s threats to shut down the U.S. border with Mexico spooked employers.
But the threat to shut down the border seems to have vaporized, so construction companies added 21,000 jobs in June (up from the measly 5,000 in May) and manufacturers hired 17,000, more — up from 3,000 in May. The government also increased hiring in June, adding 33,000 jobs.
So the economy is still growing, if at a slower pace.
But according to the Associated Press, manufacturing and construction spending are down, which signals potential uncertainty down the line.
Then there’s the matter of what people are actually getting paid to do these jobs.
David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, told NPR on Friday morning that wages have finally started to rise — only slightly above inflation — with the lowest-paid workers seeing higher benefits than those in the middle.
This, said Wessel, is largely owing to the fact that “the demands for the worker at the bottom — service workers and such — [are] apparently very sensitive to how strong the labor market is, so there must be more jobs at restaurants and stuff like that. And so that’s pushed up raises, wages, a little bit faster at the bottom than at the middle.”
However, growth in the service sector, where wages are going up, also slowed in June.
“Fed watchers hoping for evidence for deeper rate cuts will likely be disappointed by this report which shows a relatively healthy labor market,” Glassdoor senior economist Daniel Zhao told The Street.
“The stagnating wage gains, however, are concerning in this tight of a labor market. We’ll be watching closely in the coming months to see whether wage growth continues to disappoint,” he added.