The economy gained a better-than-expected 201,000 new jobs in August, while the unemployment rate held steady at 3.9 percent, the Bureau of Labor Statistics reported Friday.
Economists had predicted 189,000 new jobs, and the report should further solidify the Federal Reserve’s plans to raise interest rates amid what officials previously labeled a “strong” U.S. economy. Experts say job growth should continue into the second half of 2018, fueled partly by last year’s tax cuts.
“The economy is on a sugar high from the fiscal stimulus, and that’s going to continue through the rest of this year and into 2019,” Ryan Sweet, director of real-time economics at Moody’s Analytics, said in an interview. “Job growth is still running right around 200,000. That’s more than enough to keep up with growth in the working-age population.”
Sweet predicted unemployment may dip below 3.5 percent by the end of 2018.
Industries including healthcare, transportation, and mining all added jobs in August, the labor department said. Employment in the manufacturing sector, which has seen a surge in new jobs in 2018, was down 3,000 in the month, an early warning sign that President Trump’s trade skirmishes could be weighing on employers.
“It may not be a alarm bells going off, but when you see the manufacturing jobs decline, including the auto sector and the retail trade … that could fall into the category of things that could be affected by the burgeoning trade disputes,” Bankrate’s Mark Hamrick told the Washington Examiner. “This is something that’s having real impacts.”
Average hourly wages for private, non-farm employees grew to $27.16 in August.
While employment numbers are high, businesses have expressed concern over their ability to find enough individuals to fill open positions. Based on Friday’s report, Sweet says companies will have to work harder to find new employees.
“It’s difficult to find qualified workers, but we don’t have a labor shortage,” he said.
While some smaller companies laid off employees due to the added costs of tariffs on, among other things, steel and aluminum imports, larger corporations are signaling they will raise prices to cover the higher costs.
Trump is expected to issue additional levies on $200 billion worth of Chinese products as soon as Friday, bringing the total amount of affected goods to $250 billion. A slew of top industry groups warned the administration on Thursday that the tariffs could adversely affect small-to-medium-sized businesses.
Several economists and investors say the tariffs that have been imposed to date are more symbolic than substantive. But hiking the levies on China would be a major escalation in the trade dispute.
“For now, the tariffs that have been implemented, the dollars and cents of them, are a pretty small portion of the U.S. economy,” Sweet said.
