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Over 200,000 New Jobs, Slightly Higher Unemployment In June Jobs Report

July 06, 2018 - 2:00 pm
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NEW YORK (WCBS 880) -- The June jobs report showed 213,000 new jobs added in the U.S. last month, but also a slight rise in the unemployment rate.

But CBS News Business Analyst Jill Schlesinger’s advice with regard to the latter detail is, “Don’t freak out.”

The unemployment rate went up by 0.2 percent, from 3.8 percent to 4 percent.

“But it went up for the right reason, that is, more people entered the labor force,” Schlesinger told WCBS 880’s Wayne Cabot. “And this is what economists have been expecting. They believed that as we saw improvement, people would come off the sidelines, enter the labor force, and the unemployment rate would probably stabilize around 4 percent or so.”

Bloomberg U.S. economy reporter Katia Dmitrieva emphasized to WCBS 880’s Steve Scott Friday afternoon that the report was positive overall.

“You had additions to the payrolls that are more than expected, and you had revisions in the prior month. So in April and May, the figures rose about 37,000 all in, so it kind of pointed out to us that we keep talking about a tight labor market – how much longer can it run? And this pointed out to us that it actually has a lot of room to run,” Dmitrieva said. “We might actually be seeing, some economists say, a tightening again of that unemployment rate in the coming months.”

But wage growth has been disappointing, Schlesinger said.

"Wage growth has been so stubborn in this recovery, and, you know, it’s amazing to consider that, you know, here we are this many moths into a recovery – I think this was the 93rd straight month of job creation – and yet, wages only went up by 2.7 percent from a year ago,’ Economists are saying: ‘We don’t get this. We are really flummoxed by the idea that there are all these jobs being created, and yet, there has not yet been wage pressure.’”

The stagnation in wage growth comes at a time when many Americans are concerned about the rising cost of living.

Dmitrieva also emphasized stagnating wages as a problem.

“I got a lot of responses from Americans, and they were saying it doesn’t matter if the unemployment rate tightens or not; it doesn’t matter if there’s jobs being gained. I mean, it’s great to have a job, but what is a job without rising wages. And we keep seeing this weakness in wage growth,” she said. “They’re rising, but they’re not rising as much as they should when the unemployment market is so tight. So we’re going to be waiting to see if that rises in the coming months as well.”

“That’s the part of this that I think most Americans are sort of worried about, which is, hey, if gas is going to cost more – or maybe because of these tariffs, certain products become more expensive, I need to have a little extra money in my pocket,” Schlesinger said.

Speaking of those tariffs, the U.S. tariffs on China went into effect Thursday morning. The markets saw the tariffs coming, but there has not been a major move in the markets as a result.

“I know that there’s a lot of folks who are reporting this as a trade war. I would hesitate to use that kind of language right now. This is the first day of the $36 billion going into effect, but there will be $50 billion on each side,” Schlesinger said. “That is essentially a drop in the bucket compared to the size of the U.S. economy or the Chinese economy.”

But Schlesinger emphasized that there could be more tangible effects if President Donald Trump escalates the tariffs.

“The president has said that he is wanting his administration to start to identify an additional $400 billion of Chinese goods to wage a tariff on, and that would be getting pretty serious. The Chinese could not possibly respond to that in kind. They just don’t import enough stuff from the United States. They could do plenty of other things that would hurt us,” Schlesinger said.  “So it’s a cloud, and it’s probably inhibiting great strides forward in stock prices. But that said, nothing terrible has happened yet. We’re keeping an eye on it.”

With the tariffs already in effect targeting America’s largest trading partners, there has not been a great deal of impact in the job market, Dmitrieva said.

“We have been hearing for about nine months to a year, from manufacturers in particular, that they’re looking to freeze investment and freeze hiring. And we haven’t seen that play out, especially this month. You know, June 1, all these tariffs came in on America’s largest trading partners, including Canada, and you have, in this report at least, actually adding to the manufacturing sector. So we thought it was going to get hammered in the coming months. It might still,” she said. “But in this month, there were something like 30,000 jobs added to that sector, which was a blowout number, and the highest since December.”

But with retaliatory tariffs affecting everything from Harley-Davidson motorcycles to Kentucky bourbon and soybeans in the Midwest, an effect will eventually be felt, Dmitrieva said.

“Economists say it will eventually – most likely in August. So the June report was quite positive. The July report, we’re going to see – a lot of eyes will be focused on that to see any potential impact. And then August is when a lot of folks are thinking we can finally see it through in the numbers, and for that, you definitely want to keep a lookout for the manufacturing sector in particular and how many jobs are being added there, because, like you said, that’s where a lot of the factory jobs are,” she said.