U.S. Headline Payrolls Miss Mark, but Unemployment Rate, Wages Still Strong

In U.S. economic news on Friday, the Labor Department said the U.S. economy added 157,000 jobs last month. This headline number for July missed the forecast, but previous months were revised higher, thereby softening the disappointment. Jobs growth for June was revised up to 248,000 from 213,000.

Average hourly earnings met expectations, which helped support the U.S. Federal Reserve’s case for additional rate hikes later this year. Wages grew by 2.7 percent in July on a year-over-year basis. For the month, wages rose 0.3% versus an estimate of 0.3%. June’s figure was revised lower to 0.1%.

The unemployment rate fell one-tenth of a percentage point to 3.9 percent, as expected and is currently at its lowest level in nearly 50 years.

U.S. Trade Balance

The U.S. trade deficit widened in June for the first time in four months as exports fell and imports grew. Trade gaps with China, Mexico and Canada all increased.

According to the Commerce Department, the deficit in goods and services, or the gap between what the U.S. sells and what it buys from other countries, rose 7.3 percent to $46.3 billion in June from $43.2 billion in May. U.S. exports slid 0.7 percent to $213.8 billion; imports rose 0.6 percent to $260.2 billion, led by increases in medicine and crude oil.

Of particular concern to those watching the impact of the tariffs, the United States ran goods deficits in June of $33.5 billion with China, up 0.9 percent from May; $7.4 billion with Mexico, up 10.5 percent; and $2 billion with Canada, up 39.7 percent.

Most importantly, in the first half of the year, the United States has registered a trade deficit in goods and services of $291.2 billion, up 7.2 percent from January-June 2017.

ISM Non-Manufacturing PMI

Today’s ISM Non-Manufacturing PMI report showed activity in the services sector slowed more than expected in July.

The Institute of Supply Management’s Index fell to 55.7 percent, nearly 3 percentage points below an expected decline to 58.6 percent from 59.1 percent in June, according to economists.

“Tariffs and deliveries are an ongoing concern,” said Anthony Nieves, chair of the Institute of Supply Management. “The majority of respondents remain positive about business conditions and the economy.”

Tariff News

On Friday, China’s Ministry of Commerce said China is preparing to retaliate in the escalating trade war with tariffs on about $60 billion worth of U.S. goods.

“The implementation date of the taxation measures will be subject to the actions of the US, and China reserves the right to continue to introduce other countermeasures,” China’s release said, according to a translation. “Any unilateral threat or blackmail will only lead to intensification of conflicts and damage to the interests of all parties.”